Stronger metals quarter Breakwater’s losses

Higher prices for zinc, copper, silver and gold combined with lower treatment charges helped narrow Breakwater Resources‘ (BWR-T) losses during the third quarter.

For the three months ended Sept. 30, the zinc miner’s net loss came to $4.1 million (or 2 per share) on gross revenue of $41.6 million, compared with a year-ago net loss of $16.9 million (9 per share) on $74.5 million. Revenue slipped on lower sales volumes.

Boosted by the $10.6 million sale of the Lapa gold mine in northwestern Quebec to Agnico-Eagle Mines (AGE-T), and a non-cash foreign exchange gain of $9.6 million, earnings for the first nine months of the year came to $6.8 million (3 per share). That’s up from a year-ago net loss of $17.9 million (11 per share). Revenue between the two periods slipped by $44.9 million to $156.2 million thanks to the closure of the Nanisivik mine in Sept. 2002, and the weaker greenback in 2003.

Cash from operating activities (before non-cash working capital changes) was $1.7 million, a nice turnaround from the $6.8 million consumed in 2002. For the first nine months cash flow was positive, but off $500,000 at $4.2 million. Mining activities chipped in a quarterly loss of $2.2 million ($11 million a year earlier); for the nine-month period mining activities ate through $6.5 million ($10.6 million).

Quarterly production of zinc-in-concentrate fell 30% to 38,686 tonnes, owing to Nanisivik’s closure; so far this year production is off about the same percentage at 123,790 tonnes.

Total cash costs fell a penny to US32 per lb. during the quarter; mine site operating costs dropped US43to US$28.10 per tonne milled. For the nine-month period, cash costs were unchanged at US32 per lb., whereas mine site costs rose US69 to $28.15 per tonne.

Breakwater’s quarterly copper production slipped by 29% to 809 tonnes, silver output fell by 30% to 505,871 oz., and gold was off 810 oz. at 5,738 oz. In contrast, lead production climbed 184 tonnes, to 3,065 tonnes.

For the first three quarters, copper production was off 34% at 2,887 tonnes, silver dropped 33% to 1.6 million tonnes, and gold production slid by 1,206 oz. to 17,736 oz. Lead production increased by 391 tonnes to 10,070 tonnes.

On the sales side, Breakwater’s average realized price for its zinc was 78% higher at US36.8 per lb.; the average price for copper grew by 11.4% to US79.3 per lb.; the average realized price for gold was US$351 per oz., up 11.1% from the previous year; and silver fetched a penny more at US4.57 per oz. On the minus side, the company realized US0.8 less for its lead at US21.3 per lb. Prices were generally lower, but performed similarly over the nine-month period. Gold was the exception gaining US$51 per oz. to US$354 per oz.

At quarter’s end Breakwater had $2.2 million in cash and equivalents, down from 634 milion at the end of 2002.

Share in Breakwater were off 7, or 9%, at 71 in late afternoon trading following the news on Nov. 6. The shares have nearly quintupled in value since the beginning of the year on stronger zinc prices.