Shutdowns cost Boliden

Mining companies usually make more money when they are mining, a truth not lost on Boliden (BOL-T). Production shutdowns at the Los Frailes and Myra Falls mines have left the company with a US$31.9-million loss in the second quarter of 1999.

The net loss of US$31.9 million (31 cents per share) on revenue of US$251.9 million, over the three months ended June 30, compares with a loss of US$18.1 million on revenue of US$264.6 million in the corresponding period of 1998.

Figures for the six months ended June 30 show the company with a net loss of US$54.8 million on revenue of US$496.9 million. In the first half of 1998, Boliden lost US$45.8 million while taking in US$554.7 million in revenues.

The principal source of woe for Boliden has been the closure of the Los Frailes zinc-lead mine in southwestern Spain since a tailings dam failure in April 1998. Apart from

a US$34-million charge taken against income in the second quarter of 1998, the company effectively lost a year’s production from the operation, amounting to about 125,000 tonnes of zinc, 48,000 tonnes of lead, 4,700 tonnes of copper and 3 million oz. silver. Boliden began mining Los Frailes again at the beginning of April and the mill restarted at the end of June.

Another game leg for Boliden was the Myra Falls copper-zinc mine on Vancouver Island, which went back into production in late March following a 3-month shutdown for rehabilitation of the mine workings. The company is also still dealing with metallurgical problems at its Lomas Bayas copper mine in Chile, where the mill has operated at about 70% capacity since the mine was opened in 1998.

Boliden’s smelting division, on the other hand, made a modest US$6.4-million operating profit in the second quarter, and is up US$10 million for the first half of the year. The Ronnskar smelter in Sweden is being expanded to a 240,000-tonne annual capacity from the current 140,000 tonnes; the expansion is on schedule and on budget.

During the quarter, Boliden sold its Gibraltar property in British Columbia to Taseko Mines (TKO-V) for a “nominal” amount, subscribing for US$11.2 million in debentures that are convertible to Taseko shares. The company also sold the bulk of the assets of its recycling subsidiaries, Arv Andersson and Gallivare Metall, to Finnish metal producer Kuusakoski for US$19.8 million.