Lower base metal prices slash profit at HudBay

Lower copper, nickel and zinc prices added up to a fourth-quarter loss for Hudson Bay Mining & Smelting (TSE) and its parent Inspiration Resources (TSE). HudBay reported a loss of $2.3 million on revenue of $110.1 million in the fourth quarter ended Dec. 31, compared with a profit of $11.8 million on revenue of $109.8 million in the year-earlier period.

The company’s fourth-quarter results were negatively influenced by declining prices for copper and zinc as well as lower zinc production.

Overall earnings dropped last year to $16.6 million on revenue of $423.2 million, down from $46.4 million on revenue of $454.2 million in 1989.

HudBay said the drop in profit was partially offset by increased nickel production at the company’s 60% owned Namew Lake mine where its share of production was about 9.8 million lb. of nickel, up from four million pounds in 1989.

A re-evaluation of ore reserves at Namew Lake has resulted in a reduction, for HudBay’s share, of 4,200 tons of nickel. The loss of metal resulted from both a reduction of tonnage and a revised nickel grade of 1.97%, down from the previously reported 2.05%. The mine’s remaining life extends for less than three years, the company said.

Included in the quarter and annual results was a $3.3-million charge related to a writedown at HudBay’s Spruce Point mine where reserves will be exhausted this year.

To offset some of this year’s expected declines in base metal prices, the company is increasing its production of zinc, copper and nickel as well as implementing a $15-million cost reduction program.

Meanwhile, HudBay’s parent Inspiration Resources said it intends to exit the coal business and initiate a program to cut its costs by US$20 million. The company reported a fourth-quarter loss of US$115.4 million ($1.74 per share) on revenue of $217.1 million, compared with a loss of $2.4 million (4 cents per share) on revenue of $218.5 million in the year-earlier period.

A $78-million charge was taken in the fourth quarter to reflect the estimated costs and writedowns associated with Inspiration’s coal divestment.

For the year ended Dec. 31, Inspiration reported a net loss of $108.5 million ($1.64 per share) on revenue of $1.4 billion, compared to a profit of $25.2 million (38 cents per share) on revenue of $1.4 billion in 1989. Hudson Bay Mining and Smelting (TSE) 3 months ended Dec. 31 1990 1989 Revenue $110,100 $109,800 Net earnings (loss) (2,300) (11,800)

per share na na 12 months ended Dec. 31 Revenue 423,200 454,200 Net earnings 16,600 46,400

per share na na Inspiration Resources (TSE)* 3 months ended Dec. 31 1990 1989 Revenue $217,055 $218,471 Net earnings (loss) (115,419) (2,429)

per share (1.74) (0.04) 12 months ended Dec. 31 Revenue 1,360,725 1,357,862 Net earnings (loss) (108,501) 25,171

per share (1.64) 0.38