Teck Cominco mulling options for gold assets

Vancouver – With about 50% of its exploration budget devoted to copper, Teck Cominco (TEK.SV.B-T, TCKBF-O) is mulling over what to do with its gold operations and will likely make a decision once its Pogo mine in Alaska reaches full production in the next few months.

When asked if he would consider spinning out the gold assets into a separate company, Teck Cominco chief executive officer Don Lindsay declined to be specific, saying only that he prefers the term “change the form of ownership.”

Questions about the future of those assets were put to him by reporters following a lunchtime speech at the Roundup07 conference in Vancouver.

“We have five gold propertiesthat’s a pretty nice portfolio,” and one that has drawn unsolicited offers over the past year,” said Lindsay.

They include the Pogo and Hemlo, Ont., mines, as well as three other projects that could be brought into production within the next two to three years.

For example a pre-feasibility study is expected to be completed in the second quarter of 2007 at the Morelos project in Guerrero State, Mexico, which hosts an inferred gold resource base of 3.2 million oz.

Teck Cominco has said it would consider changes in the ownership structure of its gold assets once the 40%-owned Pogo mine reaches the commercial production phase, a stage that is expected to be reached in a few months from now.

The Vancouver resource giant’s share of production from Pogo and Hemlo will be about 400,000 oz., annually, a number that could double once the other properties are brought on stream, Lindsay said.

As Teck Cominco mulls its options on gold, the company is set to raise the amount it spends on exploration from $70 million last year. Without providing a final number, the company said 50% of the exploration budget will be devoted to copper.

Meanwhile, with exploration programs continuing in 12 countries, Lindsay told an audience of mining officials at Roundup07 that Teck Cominco wants to be “your partner of choice.”

Teck Cominco has partnerships with 55 junior exploration companies. However, despite the rise in global exploration to US$7.5 billion last year (a 47% rise from the previous year, according to Metals Economics Group), Lindsay said results so far have not been tremendous. The result, he said, is that resources in the ground keep getting more valuable, as the cost of discovering resources continues to climb.