Suppliers News (June 05, 2006)

Finning posts record profits

Finning International (FTT-T, FINGF-O), supplier of heavy equipment to the mining and construction sectors, posted record first-quarter profits on the back of equipment and service contracts to mining and energy companies ramping up production in Canada and Latin America.

The Vancouver-based company said its earnings clocked in at $56.9 million or 63 per share on revenue of $1.24 billion for the three months ended March 31. That compared with profits of $37.4 million or 42 per share in the same period a year ago. Quarterly revenue for the comparable period of 2005 was $1.15 billion.

The first quarter’s earnings included $8.6 million in after-tax gains on the sale of surplus properties and some of its Canadian remanufacturing business.

But a lack of labour and equipment, such as tires, could reduce long-term profits. Finning is the world’s largest dealer of Caterpillar (CAT-N) heavy equipment.

Perhaps most critical is a shortage of skilled labour, especially in the oilsands of northern Alberta, where Finning does a brisk business.

Finning has launched a recruitment campaign across Canada and even went to Germany to find suitable workers. Finning has hired 1,000 employees in Latin America over the previous 18 months for its operations there, and established an education facility to train its workers.

Finning recently signed an agreement with its workers in Western Canada, but still finds it tough to find and keep workers.

Finning recently signed a new 3-year contract with its hourly employees in its Canadian division, Finning Canada. The agreement covers the 775 hourly workers represented by the International Association of Machinists and Aerospace Workers (Local 692) employed at Finning operations in British Columbia and the Yukon. The deal expires in April 2009.

The agreement provides a wage increase of 4.5% in year one, and 4% in each subsequent year.

Aussie firms do deal Down Under

Australia’s Alliance Resources (AGS-A) has awarded the first stage of development at the Alliance South underground uranium project in Victoria, Australia, to Aussie contract miner Deckoss Mining, which recently completed the underground contract at Alliance’s Mineral Hill project in New South Wales.

The first stage includes building the 1,900-metre Maldon exploration decline at a cost of A$7 million over 15 months. This includes 460 metres of access and sill drives to permit close-spaced drilling and bulk sampling of the Alliance South mineralization for trial processing through the company’s Maldon treatment plant. In addition, a A$1.5-million dam will be built next to the treatment plant to manage mine water from dewatering the decline route.

The decline is an extension of an existing decline and is designed to parallel the Eaglehawk Reef, the main producing reef at the past-producing Maldon gold mine. The decline will be used as a platform for underground drilling for possible remnant mineralization to the east in the vicinity of the Union Hill deposit, Union Hill South and Alliance lodes, as well as testing the Day Dawn target, to the west.

The second stage will eventually include a ventilation rise, internal decline and further horizontal development to permit production mining.

The decision to restart development at Maldon comes just 2.5 years after Alliance started a detailed geologic review of the historic high-grade gold field, which produced 1.7 million oz. gold between 1856 and 1926 at an average grade of 28 grams per tonne.

Goldrea taps Wardrop for study

B.C.-based Goldrea Resources (GOR-V, GORAF-O) has awarded the contract to evaluate the Daye gold mine, owned by Chinese firm, Rushan City, to Wardrop Engineering.

Wardrop will complete a National Instrument 43-101-compliant valuation of the Daye mine, an operating gold mining and milling operation within the boundaries of Rushan City, Shandong province, China.

Goldrea is negotiating to buy the operation, subject to a positive evaluation.

Goldrea has translated reports outlining the Daye gold mine assets, sericite operation (25%) and the concrete block fabrication assets (30%) from Chinese into English. Wardrop is at the Daye site and has begun its technical evaluation.

Daye operates at 2,400 tonnes per day using about 800 tonnes of ore from the Daye property, with the balance milled from other operations in the area. Goldrea plans to eventually feed the mill entirely from the Daye and Goldrea/Daye joint-venture property by defining further resources. In the meantime, the processing of other ores in the area provides a source of cash flow.

The 300-metre, 5-compartment concrete-lined shaft at Daye is advancing at a rate of 1 metre per day. The shaft should be capable of handling up to 400 tonnes per day, to be lifted to the surface using 1-ton Granby mine cars, a type of automatically dumped car for hand and power-shovel loading.

Goldrea has two diamond drills exploring the joint-venture leases at Daye.

Grandview signs Boart

Grandview Gold (GVX-T, GVGDF-O) has signed Boart Longyear Drilling to deep drill its gold properties in Nevada.

The contract includes drilling at least 12 deep holes totalling 30,000 ft. on the Pony Creek/Elliot Dome properties optioned from Mill City Gold on the famed Carlin Trend. Drilling was slated to begin in May.

The 12 drill-hole targets are near Grandview’s drill hole PC-05-02/2A, which returned some high-grade intercepts during earlier campaigns.

Grandview has hired Elko, Nev.-based Carlin Trend Services to co-ordinate all aspects of preparing road access, satellite-based grid definition in the area of the drill targets, water sources for the drill rigs, as well as related geological field support.

In addition, Grandview commissioned Matrix Geo-Technologies along with Watts Griffis McOuat of Toronto to carry out geophysical structural analysis surveys down to depths of 650 metres in the vicinity of the first six drill targets. This program was to be completed in May.