Gibraltar profits

After six years of losses, Gibraltar Mines (TSE) describes its return to profitability as particularly significant because it “probably has the lowest grade orebody of any operating copper mine in the western world.”

Net earnings of approximately $4.3 million represented an $8.8 million improvement from the previous year and Gibraltar paid out 40 cents in dividends in 1987, twice that paid in the preceding five years combined.

Placer Dome (TSE) owns 68% of Gibraltar.

Addressing the annual meeting in Vancouver recently, Anthony J. Petrina, president, also said Gibraltar would report a profit for the latest quarter.

Petrina noted that higher copper prices were largely responsible for the improved performance in 1987 “with increased production also contributing.” The company’s average copper price for 1987 was 80 cents (US), about one-third higher than the previous year. But he cautioned that “these prices do not reflect a sustainable turnaround in the copper market.”

Claiming the price improvement was caused by a number of supply- side factors “which are expected to correct themselves in the short term,” Petrina suggested that copper prices may decline later this year from current levels. “We are not, however, looking for a return to the depressed prices we saw prior to 1987,” he emphasized.

Mineable reserves have doubled to approximately 200 million tons and mine life is now estimated at about 15 years. One-third of Gibraltar’s earnings were attributed to an associated company, Cuisson Lake Mines (41% interest), Petrina said. Under a 1973 agreement, Gibraltar mines and purchases ore from adjoining claims held by Cuisson which form part of the Granite pit. The quantity of ore from these claims is expected to decline by 50% to 2.5 million tons this year and a further decline is anticipated next year.

Earnings from cathode copper production are expected to increase this year. A second dump area is being leached and feed grades for the cathode plant have improved significantly. The plant is still being fine tuned and Gibraltar expects to reach design capacity of 10 million lb in 1988.

Total copper production is expected to decline, however. Half of the mill feed will be lower grade material from the bottom of the Granite Lake and Pollyanna pits which is also harder, he noted. Copper in concentrate form is expected to decline to about 64 million lb but over-all output should be about 74 million lb with the increased cathode production.

Molybdenum prices recently reached $4(US) per lb and if prices remain at this level Petrina said it “could make a significant contribution to Gibraltar’s 1988 results.”