Copper surge creates cash for Aur Resources

Aur Resources’ (AUR-T, AURRF-O) production may have dropped in 2006, but a spike in copper prices allowed the company to more than double its net income to US$293.7 million.

Aur produced 223 million lbs. of copper in 2006 — 17 million fewer lbs. than in 2005, when the company’s net income was US$142.3 million.

But the price of copper peaked at US$3.99 per lb. last May and averaged US$3.06 per lb. for the year. Aur’s average realized price was US$3.30 per lb.

The company paid US$25.5 million in dividends in 2006, or US$1.20 per share. Shareholders’ equity increased 47% in 2006 to US$646.9 million.

Mining revenue was 65% higher in 2006 at US$738.3 million, but cash operating costs were US11 higher at US78 per lb. — a result of lower production and higher energy, reagent and labour costs.

Production at Aur’s Quebrada Blanca mine in Chile rose to 181.6 million lbs. copper from 177 million lbs. in 2005, while production dropped at the Andacollo mine, also in Chile, to 41.4 million lbs. copper from 51.6 million lbs. the year before.

Another 11.4-million-lb. decrease in copper production was due to the closing of the Louvicourt mine in Val d’Or, Que., last July.

Looking ahead, Aur plans to increase production by more than 100% over the next three years. The company has set aside US$8 million for exploration and US$3 million to find acquisition opportunities for advanced-stage projects in 2007.

The Duck Pond copper-zinc mine in Newfoundland was supposed to be completed during the last quarter of 2006, but weather and concentrator commissioning delays pushed commercial production to February of this year. Duck Pond is expected to produce 30 million lbs. copper and 56 million lbs. zinc in 2007, with a lifespan of 6-8 years.

Production at the 90%-owned Andacollo hypogene copper-gold deposit in Chile is expected to start by late 2009. The company spent US$19 million on the project in 2006. Aur has started basic engineering and geotechnical studies related to mine design and on environmental permitting. Aur expects the equipment fleet orders to begin arriving in the summer. The mine is expected to produce 155 million lbs. copper and 58,000 oz. gold per year over 21 years.

Aur spent US$8.1 million on exploration in 2006 compared with US$7.4 million a year earlier. The drill program at the Eldorado gold-silver property in southern Argentina is ongoing and two other drill programs will start by early 2007 — the Macuchi massive sulphide property in Ecuador, where 435,000 tonnes of ore grading 11.5 grams gold per tonne and 4.7% copper were mined during the 1940s, and the Coyote porphyry copper property in central Chile.