Falco Copper caps red ink and moves on Winston Lake

Progress is on target for full production in early 1988 at the rich zinc orebody at Winston Lake, near Schreiber, northwestern Ontario, John Carrington, vice-president operations of Corporation Falconbridge Copper tells The Northern Miner.

At this stage, the idle 1,200- 1,400-ton plant at Sturgeon Lake has been dismantled and is being transported 125 miles south to the Winston Lake site. Approximately 75% of the mill is already at Winston Lake, with delivery of the remaining portion expected within the next couple of weeks. Barring bad weather, the mill should be erected before year-end, says Mr Carrington. Pouring of the concrete for mill foundations and crusher have already been completed.

Other developments on site include the completion of upgrading the 14-mile road north from the Trans-Canada Highway to first- class standards. As well, the construction of the water retention dam is now finished.

The Winston Lake deposit hosts probable and possible reserves of 3.4 million tons grading 1.0% copper, 16% zinc, 0.96 oz silver and 0.03 oz gold per ton. It was one of several assets that Kerr Addison Mines acquired when it purchased approximately 50% of Falconbridge Copper from Falconbridge Ltd. this past August for a cash consideration of $120.2 million. Effective Sept 1, the accounts of Falconbridge Copper were consolidated with those of Kerr Addison. At the time of the purchase Kerr acquired a company with a healthy cash position and the story is no different today as indicated in Falconbridge’s latest financial report.

For the 9-month period ended Sept 30, Falconbridge Copper posted a cash position of $76.2 million, up from the $63.5 million posted in the same period of 1985. Increased profit

A combination of higher gold production, lower treatment charges and increased average gold prices boosted profit to $3.1 million or 23 cents per share, a considerable improvement over the loss of $905,000 or 7 cents per share posted in the same period last year.

Gross revenues for the recent 9-month period amount to $71.3 million compared to $76.3 million posted last year. The reason for the $5.1 million drop is lower production at the Opemiska and Lake Dufault divisions.

At the Opemiska division tonnages milled were lower due to the planned 3-week summer shutdown and tight ore availability. And at the Lac Dufault division, production from the Corbet mine which has been winding down over the year was terminated in mid-September as planned.

Gold production in the current 9 months increased to 89,000 oz, up 10,000 oz over the same period last year.

Looking only at the third quarter, Corporation Falconbridge realized a profit of $850,000 or 6 cents per share on revenues of $23 million, compared to a loss of $47,000 on revenues of $24 million.

Capital expenditures for the 9-month period amount to $15.5 million. While $7.8 million has been spent on the Winston Lake project, $6.5 million has gone into the Ansil copper deposit near Noranda, Que. Here, drill-indicated reserves amount to 2.3 million tons grading 7% copper, 0.50% zinc, 0.7 oz silver and 0.05 oz gold per ton.

Work has started on the ventilation shaft at the Ansil, says Mr Carrington, and the production shaft is down to the 4,400-ft level. Production at the Ansil is slated to start no earlier than 1989. Kerr profit dips

Meanwhile, for new parent, Kerr Addison, earnings were somewhat lower in the latest 9-month period. A net income of $2.3 million or 13 cents per share was realized for the period ended Sept 30 down from the $3.3 million or 22 cents per share posted in the same period last year.

Substantially lower profits from Canadian Electrolytic Zinc, in which Kerr holds a 9.8% interest, and reduced gains from the sale of investments, were the primary reasons for the profit dip.

Gold production for this Noranda Inc.-controlled company was 34,200 oz from its Virginiatown, Ont. mine, down 2,000 oz from the same period of 1985. The reason for the decline is that the average grade of ore milled was lower in this most recent period. Mining and smelting income was down to $1.8 million from the $3.3 million in the same year-ago period.

Oil and gas income, however, was up to $2.07 million from $1.6 million due to reduced provincial royalties and federal PGRT taxes. As well, production prices and volumes were lower, with the exception of natural gas liquids production from Canadian Hunter, where sales increased.

Cash flow from operations and investments for Kerr held steady at $12.4 million or 72 cents per share, similar to the same period in 1985. At Sept 30, Kerr’s consolidated cash position stood at $75.4 million with long-term debt at $70 million.