Noranda continues to rebound

In step with most of its competitors, base metal major Noranda (NOR-T) has started the new year by significantly improving its earnings.

For the first quarter, Noranda posted earnings of $68 million (or 27 per share) on sales revenue of $1.78 billion, compared with earnings of $4 million (nil per share) on revenue of $1.44 billion during the same period last year.

Noranda attributes the rebound to both improved productivity and higher prices for nickel, aluminum and copper.

Still, earnings were $21 million less than in the fourth quarter of 1999, owing to a $32-million earnings drop that stemmed from technical hiccups at the company’s copper and zinc operations. Copper output from the Altonorte smelter in Chile was reduced during the quarter as a result of a maintenance shutdown, and production dipped at the Horne smelter in Rouyn-Noranda, Que., in response to an oxygen plant failure and cold weather.

Concentrator production at the Brunswick zinc mine in New Brunswick was interrupted for 10 days pending the construction of a temporary ore conveyor system, while production at the new Bell Allard zinc-copper mine, near Matagami, Que., was suspended for five weeks after the main shaft was damaged by a hoisting skip.

Mine production during the 3-month period included: 100,000 tonnes zinc (compared with 113,000 tonnes in the first quarter of 1999); 78,000 tonnes copper (compared with 91,000 tonnes); 15,000 tonnes nickel (14,000 tonnes); 8,000 tonnes ferronickel (2,000 tonnes); 17,000 tonnes lead (18,000 tonnes); and 2.2 million oz. silver (3.1 million oz.).

Refined-metal output consisted of: 104,000 tonnes zinc (102,000 tonnes in the first quarter of last year); 108,000 tonnes copper (122,000 tonnes); 25,000 tonnes nickel (21,000 tonnes); 28,000 tonnes lead (unchanged); 314,000 oz. gold (261,000 oz.); 11.8 million oz. silver (10.8 million oz.); and 55,000 tonnes aluminum (unchanged).

Noranda is in the midst of a large capital-expenditure program targeting more than half a dozen projects worldwide. Investments in new projects and existing operations totalled $1.4 billion in 1999, and a further $968 million and $446 million will be spent in 2000 and 2001, respectively, including $180 million on the expansion of the Altonorte smelter.

Noranda reports that its $766-million, 80%-owned Magnola magnesium plant in Quebec is more than 92% complete and on schedule to start producing metal in July 2000.

Magnola, which is expected to reach 60% of its 63,000-tonne-per-year capacity by end of the first quarter of 2001, will eventually become the largest magnesium plant in the world and among the world’s lowest cost producers.

Noranda has budgeted $50 million for exploration this year, divided by region as follows: Canada (not including Toronto), $17.3 million; Toronto, $5.8 million; Latin America, $17.2 million; and “other,” $9.7 million. Some 60% of the funds are being directed towards the search for zinc, whereas the remainder is earmarked for copper exploration.