Cyprus Minerals earnings bolstered by metal prices

“Strong copper and molybdenum markets and increased copper/ molybdenum sales volumes from properties acquired in 1988 are largely responsible for the 3-fold first quarter increase in earnings versus 1988,” said President Kenneth Barr.

Barr emphasized that “cost reduction and marketing improvements also helped,” and he added the outlook is favorable for the next quarter and possibly for the year “barring any domestic recession.”

Operating subsidiary, Cyprus Copper, earned $109.1 million in the quarter, an $82.4-million jump from the previous year. (These earnings do not include corporate overhead, interest and income taxes). That increase was attributed to higher copper prices that averaged $1.47 per lb, compared to 99 cents the previous quarter. Copper sales during the quarter (145 million lb) were 80% higher because of the acquisition of the Cyprus Miami and Twin Buttes operations in Arizona.

Molybdenum prices staged a moderate turnaround improving the profitability of the company’s Tonopah mine in Nevada and Thompson Creek mine in Idaho.

Things weren’t quite as good with Cyprus Gold which lost $3.4 million during the quarter compared with earnings of $1 million in 1988. Gold sales were 29,000 oz but lower prices and higher costs at the Copperstone mine in Arizona helped depress earnings. First quarter results were also affected by $2.5 million in exploration expenses. Cyprus Specialty Metals earned $4 million during the quarter because Foote Mineral Company, which Cyprus acquired last year, was counted for the whole quarter. Foote Mineral is the largest free world producer of lithium, which remains in strong demand.

Higher development costs, severe weather conditions and equipment problems at the Shoshone mine in Wyoming reduced earnings of Cyprus Coal to $2.5 million, about half the previous year’s total. Kentucky coal operations, which are now being consolidated into one operating unit, reported lower profits because of poor weather conditions.

First quarter results for Cyprus Industrial Minerals amounted to $6.6 million and included a pre-tax gain of $6.7 million from the sale of Cyprus’ clay operations.

Cyprus is still on the acquisition trail. Three months ago, the company acquired Windsor Minerals, the talc-producing subsidiary of Johnson & Johnson with operations in Vermont and California and annual sales of approximately $15 million. The company also acquired three surface and one underground mine from Hawks Nest Coal near Charleston, W. Va., and it expanded its copper markets and customer service capabilities by buying Warrenton Refining, a producer of high quality ingots and wirebars.

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