Cominco has four new mines and expects others in 1988

Veteran producer Cominco Ltd. marked its first year under new management by dramatically reversing a profit slide, reducing debt by half and planning four new mines.

As reported earlier, earnings shot up to $172 million from a loss of $151.6 million in 1986 (N.M., Feb 8/88). Total debt was cut to $378.7 million from $643.9 million at the beginning of the year.

“There are currently four new mines under construction by Cominco and its affiliates and there is an excellent possibility that others will be announced during 1988,” President Robert Hallbauer says in the annual report.

Cominco is already one of the world’s largest producers of lead and zinc. Emphasis on programs to reduce costs and improve productivity will remain a key part of Cominco’s strategy, Hallbauer says. At its Trail, B.C., metallurgical works a lead modernization project was started, the first phase of which will be completed by 1989.

A 17-week strike shut down operations at Trail and the Kimberley mine, but this was offset by higher prices for zinc, lead and silver together with improved productivity and lower unit costs. Copper a bright star

Copper is now a bright star on the balance sheets, elevated by higher prices and Cominco’s 50% ownership in the Highland Valley Copper operation (shared with Lornex, 45%, and Highmont Mining Co., 5%). Cominco will get $16.7 million as a result of the agreement to include Highmont’s mine and mill in the partnership. The $70- million integration of Highmont’s mill and installation of in-pit crusher and conveyor systems will increase mill throughput to approximately 145,000 tons per day, making it one of the world’s largest and lowest-cost copper producers.

Gold is also getting a higher profile in Cominco’s activities following creation of Cominco Resources International in April, 1987. The latter was formed to operate the Buckhorn gold mine near Carlin, Nev., and to explore over 50 properties transferred to it by Cominco.

Funded by a $36.7-million public offering, success followed fast. In December, promising results from drilling at the Buckhorn mine were announced and a production decision was made by Cominco Resources and its joint venture partner to develop the Marte gold mine in Chile. Cominco Resources has a 25.6% interest in this heap leach operation, which will begin producing 95,000 oz of gold a year by mid-1989.

Another highlight noted in the report is a decision to start production at the Hellyer lead-zinc mine in Tasmania. Cominco has a 46% interest through its Australian associate Aberfoyle Ltd. The $112-mil lion project will be completed early 1989.

The Red Dog zinc-lead-silver mine in Alaska will assure Co minco’s future as a leader in base metal mine production, Hallbauer tells shareholders. Red Dog is scheduled to begin producing concentrates for shipment to Trail and to customers in Asia and Europe in 1990. Cominco’s experience in the far North is a major advantage in construction of the Red Dog mine. The company’s Polaris mine, located on Little Cornwallis Island, N.W.T., is the western world’s northernmost base metal mine. In 1987, the Polaris mill treated a record 1,084,400 tons of ore to produce 227,100 tons of zinc concentrate averaging 62.5% zinc and 37,000 tons of lead concentrate averaging 79% lead. Pine Point exhausted

A sad note was the final ore exhaustion of the Pine Point zinc- lead mine, also in the Northwest Territories, where mining ceased in June. Milling is scheduled to end in March, 1988, but concentrate sales will continue until 1990 or 1991. The mill treated 3,514,000 tons in 1987 to produce 533,000 tons of concentrate averaging 59.5% zinc and 163,300 tons of lead concentrate averaging 77.1% lead.

On the exploration front, gold was the main target, with the most promising prospect being the Snip project near Stewart, B.C. Diamond drilling over the past two years has identified a zone estimated at 1.2 million tons grading 0.7 oz gold per ton. An underground program will follow in 1988 and, if successful, construction will be initiated prior to year-end, Hallbauer says. Co minco has the right to back in for a 60% interest with Delaware Re sources holding the rest.

Concentrating on mining operations, Cominco put its fertilizer business up for sale in 1987. The U.S. retail operations were sold for $14.8 million, but remaining operations were taken off the market and may be retained. The $116- million Joffre nitrogen project was completed, including a 110,300-ton urea plant expansion at Carseland, Alta., new ammonia storage and shipping facilities at Vanscoy, Sask., and at Leal, N.D.

Cominco reduced its debt during the year by selling off other assets, including West Kootenay Power and Light Co. for $81.7 million. The realization of $51.7 million through a preferred share issue and a $99-million common share offering increased Cominco’s equity basis. Working capital rose to $426.7 million compared with $226.1 million at the end of 1986.