Union hecklers disrupt annual meeting of Westmin Resources

The annual meeting of Westmin Resources (TSE), held here recently, was anything but ordinary. Much of President Walter Segsworth’s address was punctuated by long bouts of heckling from various members of the Canadian Auto Workers Local 3019.

Union members have been locked out of Westmin’s Myra Falls operation since late April, 1993, when the company determined that bargaining for a new collective agreement was leading nowhere.

The two sides remain deadlocked and Segsworth lamented that the locked-out employees do not have a great deal of incentive to settle the dispute, since the nearby boom town of Campbell River has provided alternative employment on top of the support provided by unemployment insurance and strike pay. Both Campbell River and the Myra Falls operation are on Vancouver Island. Westmin is seeking concessions in benefits and wages, noting that the package offered to the union is better than what is received by most other mining company employees in British Columbia.

The lockout at the Myra Falls operation, combined with low metal prices, high smelter costs and reduced investment income, resulted in a $27-million loss in 1993 on revenue of $37 million. That compares with a loss of $18.1 million on revenues of $105.7 million in 1992.

For the first quarter of 1994, Westmin reported a loss of

$5.3 million on revenues of $4.4 million.

It also suffered a cash flow deficit of $15.3 million in 1993, compared with a surplus of $6.7 million in 1992. The company noted that the deficit would have been worse had operations continued under the old Myra Falls labor contract.

Westmin has been operating Myra Falls with non-union staff on a limited basis since October, 1993, and production tonnage is now running at about 25% of normal.

Segsworth noted that, using staff, productivity per manshift is currently almost 40% higher than under the previous labor contract. It now stands at about 900 tonnes per worker per quarter.

Development work is also continuing and the first stope in the so-called Battle zone is scheduled to enter production about six months after full operations begin.

The capital cost of bringing the zone into production is estimated at $12 million, including $7 million in deferred development and $5 million for new mining equipment.

Proven and probable minable reserves in the Battle zone are estimated at 2.9 million tonnes grading 2% copper, 0.4% lead, 10.3% zinc, 0.9 grams gold and 20 grams silver per tonne.

The nearby Gap zone contains a further minable, proven and probable reserve of 714,000 tonnes grading 1.5% copper, 0.9% lead, 10.6% zinc, 2.5 grams gold and 121.2 grams silver.

The two zones form the bulk of a higher-grade reserve discovered by drillers in early 1991. Comparatively, the ore mined in 1993 (mainly from the H-W mine) averaged 1.88% copper, 0.14% lead, 2.77% zinc, 1.89 grams gold and 21.93 grams silver.

Cash production costs (including concentrate transport but not including smelter charges) averaged $51.8 in the first quarter of 1993. Union members at the annual meeting asked why the company needed concessions, given the high grade of the Battle and Gap zones. At which point, Chairman Paul Marshall pointed out that Westmin was not being run solely for the benefit of the workers.

Shareholders of Westmin have certainly not fared well over the past 10 years. Although they have consistently received dividends of 20 cents per common share

per year over the period, the share price performance has been dismal. From a high of $17.70 in 1984, the issue fell to a low of 1.55 before the new discoveries in 1991. Since then, the company has traded as high as $6.25 and currently sits at about $4.60.

At the end of 1993, Westmin had $5.5 million in working capital, $81.7 million in long-term debt (of which $46.7 million is coal-related, non-recourse debt), $103 million in preferred shares and 43.4 million common shares outstanding.