Noranda restructures for growth

A restructuring by Noranda (TSE) has resulted in Noranda Minerals being replaced by two new entities, Noranda Mining & Exploration (NM&E) and Noranda Metallurgy.

The announcement follows a year of “strategic planning,” the conclusion of which was that priority had to be given to the rebuilding and growth of Noranda’s wholly owned mining sector while, at the same time, maintaining the growth of the company’s metallurgical business.

John Carrington, recently appointed president and chief executive officer of NM&E, says the restructuring will allow each of the companies to focus more clearly on their respective projects and act on growth prospects. “Our mining assets were shrinking because we were so focused on rebuilding our balance sheet,” Carrington says. “It is now time to correct that and position ourselves to take advantage of new opportunities emerging around the world.”

As a first step, NM&E is searching both internally and externally for a vice-president to head up its exploration division. This division will include a technical services group and geographically oriented exploration teams. Emphasis will be placed on base metals, while an associated company, Hemlo Gold Mines (TSE), will continue to concentrate on precious metals targets.

Carrington says his goal is to build up Noranda’s reserve base, either through exploration or by acquisition. “But that’s only one side of the equation; there is also the sustainability side cents whereby] we generate cash from operations,” he says. “The two have to go hand in hand.” Carrington adds that Noranda expects to go far afield, if necessary, to pursue growth opportunities. (A strategy is being formulated to determine which countries offer the best opportunities for growth.)

In the past, the Noranda group concentrated on projects near its existing metallurgical infrastructure. “That’s why we were aggressive and got involved in the Louvicourt discovery near our Horne smelter a few years ago,” Carrington explains. “But Horne is now quite independent of our mines, and we expect Gaspe and other smelters will also become more independent.” NM&E expects to spend $23 million on exploration next year, with about 25% targeted for Latin America. The company already has exposure to exploration projects in Chile, Mexico and Argentina and recently signed its first two agreements for copper projects in Peru.

“We are not running away from Canada,” Carrington says, adding that “about 70% of our budget will be spent here. But we are preparing ourselves to be more aggressive elsewhere in the world. We intend to be out there competing.”