Teck pledges to extend Highland Valley mine

Vancouver Teck Cominco (TCK.B-T, TCK-N) is set to extend the life of its Highland Valley copper mine in south central British Columbia by another six years, a move that will require about $300 million in capital costs, the company said.

The announcement came after Teck Cominco posted sharply higher earnings in the fourth quarter ended Dec. 31, 2006, and said it will use excess cash to buy back up to 20 million of its class B shares common shares.

Due to strong commodity prices and delayed sales from its Red Dog mine in Alaska, the Vancouver company reported a profit of $866 million, or $4.02 a share in the fourth quarter.

That was up from a profit of $510 million, or $2.50 per share, in the same three-month period a year earlier.

The company said it also plans to ask shareholders to approve a two-for-one split of its class A and B subordinate voting shares, with the split likely to take place in May.

Teck did not specify how much money it expected to use on the buy-back, but at Monday’s closing price on the Toronto Stock Exchange it would be valued at about $1.65 billion.

Turning to the revised mine plan at Highland Valley, Teck Cominco said it contemplates that from 2013 to 2019, an additional 247 million tonnes of ore from an expanded Valley pit and continued mining of the Highmont pit will produce 1.5 billion pounds of copper and 21 million pounds of molybdenum in concentrate.

The capital cost associated with the extension is approximately $300 million (in 2007 dollars), consisting of $167 million in incremental waste stripping and the balance for mobile equipment.

Approximately $50 million of mobile mining equipment will be ordered in 2007 to permit waste stripping to commence in 2009.

Copper production during the extension period from 2013 to 2019 is expected to average approximately 295 million pounds per annum. Life of mine copper and molybdenum grades are expected to decline by approximately 10% as a result of the inclusion of lower grade ore in the mine plan.

This is good news for the workforce at Highland Valley, local communities, the Province of B.C. and for Teck Cominco shareholders, said Teck Cominco chief executive officer Don Lindsay.

Highland Valley is one of the most efficient mining operations in the copper industry, and this extension significantly adds to its potential for the future.