Teck Cominco’s Q3 another record

Vancouver – Reporting its fourth consecutive record quarter, Teck Cominco (TEK-T) has delivered $120 million in third quarter net earnings.

Despite taking an after-tax hit of $52 million on its investment in Sons of Gwalia, the company still saw the record income of $120 million, or 62 per share for its 2004 third quarter, compared with $16 million in the third quarter of 2003.

Commodity prices were the principal factor for the robust earnings, specifically copper, zinc, lead, coal and molybdenum all up from the comparative quarter in the prior year. Strength in Canadian dollar did, however, offset some of the benefit of the surging commodity values.Cash flow from operations over the period was $337 million, up from $86 million in the same quarter of 2003.

Teck Cominco reduced its net debt, now standing at $538 million, by $203 million in the quarter. The company’s cash balance as of the end of the quarter stood at $429 million.

Teck Cominco’s Highland Valley Copper mine in south-central British Columbia saw an operating profit of $125 million for the quarter, up from $11 million a year ago. Copper and molybdenum prices, both up significantly over the year, primarily contributed to the performance. Copper production of 43,200 tonnes was almost on par with that of Q3-2003, and molybdenum production rose 25% to 2.5 million pounds in the quarter mostly through processing improvements.

The company’s 22.5% interest in the Peruvian Antamina zinc-copper mine delivered $59 million in quarterly operating profit, up from $7 million in the prior year. The mine produced 91,900 tonnes of copper and 45,000 tonnes of zinc in the third quarter.

The world’s largest zinc concentrate producer, the Red Dog lead-zinc mine in Alaska, gave Teck Cominco $59 million in operating profit for the third quarter, up from $6 million in 2003. The operation produced 152,800 tonnes of zinc and 32,800 tonnes of lead in the latest three-months, similar to the same period in 2003.

The company’s Trail Smelter and Refinery complex returned an operating profit of $40 million from both its metals operation and electrical power sales, comparatively, just $5 million was realized in the corresponding quarter of 2003. Zinc production set a new quarterly record, 76,600 tonnes, and lead output was 21,200 tonnes.

Teck Cominco continued to realize growth in profit from its 38% owned Elk Valley Coal Partnership. Attributable third quarter net income to the company was $39 million, up from $24 million in the previous year. Total coal production for the quarter exceeded 5.7 million tonnes, up from about 4.8 million tonnes the prior year. Elk Valley is the second largest metallurgical grade coal operation in the world. Strong demand from steel mills and refineries worldwide has continued to keep prices buoyant.

In late August of this year, Australian gold producer Sons of Gwalia essentially went into bankruptcy. Teck Cominco held a 9% equity interest in the company which has been written off in the quarter, resulting in a $52 million accounting on an after-tax basis.