Weak Australian dollar affects MIM’s performance

Despite the recent weakness of the Canadian dollar, most of this country’s mining companies continue to turn over a profit. This is because the products exported are sold in American dollars. Yet in Australia, where that nation’s dollar has appreciated relative to the U.S. dollar, the situation is just the opposite.

According to a presentation at MIM Holdings’ 1993-94 annual meeting, the strengthening Aussie dollar has adversely affected that company’s performance. Compared with the company’s 1992-1993 fiscal year, average prices for copper, zinc, lead and coal were lower while prices for gold and silver increased. For example, the average copper price received by MIM in Australian currency was 14% lower in 1993-94 than it was the previous fiscal year.

So despite increased productivity and higher production levels at several of MIM’s mines, the company experienced a net loss of AUS$195.1 million, compared with a profit of AUS$74 million a year earlier.

The loss would have been much worse were it not for a A$370-million increase in revenue received from the sale of investments. Among the assets sold were the company’s 13.85% interest in Cominco (TSE) and its 3.5% stake in Metallgeschellshaft.

MIM is now building for the future by developing projects which are intended to reduce costs.

The McArthur River zinc-lead-silver deposit in northern Australia is expected to enter production in mid-1995, and a feasibility study is under way at the Bajo de la Alumbrera copper-gold deposit following the purchase of a half interest in the Argentine project from International Musto Explorations (TSE). A feasibility study is also in the works at MIM’s 51%-owned Ernest Henry copper-gold deposit, and the company is negotiating to acquire a third of the Cannington silver-lead-zinc project. Both projects are in Queensland, Australia.