Zinc Boosts Conwest’s earnings

In fact it was mostly zinc that contributed to Conwest’s 1988 profit of $12.8 million or $1.01 per share. While the average price realized for oil declined for the fourth straight year in Canada, zinc prices went through the roof. Accordingly, the Nanisivik mine on Baffin Island upped production by 9% over 1987 to 700,000 tonnes. Nanisivik is a wholly-owned subsidiary of Mineral Resources International (TSE) and Conwest is MRI’s majority shareholder holding 51% of its shares. The mine is one of the world’s lowest cost zinc producers.

The price of zinc rose to an average of $1,467(US) per tonne in 1988 from $855 the year before. Early this year, price peaked at almost $2,100 and now hovers around $1,750, Lamacraft told the shareholders. Outside the U.S., where the strong dollar has affected prices, the price of zinc remains near its peak, he added.

Proven and probable reserves at the arctic mine stand at 2.5 million tonnes of grade 10.1% zinc, 0.3% lead and 42 grams per tonne silver. Reserves should last the mine for at least another five to six years and probably longer, said Lamacraft.

Faraday Resources (TSE) is majority shareholder of Conwest with 51% of outstanding shares. Lamacraft is also president and chief executive officer of Faraday.

Hedging zinc has been considered by the company to take advantage of the current high prices, he said in response to a shareholder’s question, but the practice is fraught with practical problems. For example, the possibility of even higher zinc prices discourages forward selling, he added, and could lead to losses.

Conwest has interests in a number of other mineral plays. Near Sudbury, Ont., Conwest and Falconbridge Ltd. (TSE) are exploring the West Graham nickel-copper- platinum property. Falconbridge is drilling holes of 3,000-6,000-ft depth along a mineralized zone at the edge of the nickel irruptive. So far, grades have been sub-economic.

Exploration of the Midway project in northern British Columbia held by Regional Resources (TSE) is also being discussed with the aim of increasing reserves at the lead-zinc-silver mine by another one million tonnes. Existing reserves are 1.2 million tonnes of grade 7.0% lead, 9.6% zinc and 13 oz silver per tonne. Regional is 29%-owned by MRI.

In New Brunswick, Conwest is 100% owner of the Half-Mile Lake property, also a lead-zinc-silver property. Reserves of 13.6 million tonnes have been identified grading 7.5% zinc, 2.5% lead, 0.19% copper and 0.90 grams silver. Noranda (TSE) will earn a 100% interest in the property by spending $11 million and bringing it into production by 1992 with Conwest receiving 25% net profits royalty. If it is not producing by then, but if Noranda has spent $11 million, Noranda will earn a 50% interest and become operator.

Turning to gold, Conwest owns 18% of Consolidated Professor (TSE), holder of the Duport property with reserves of two million tons of 0.36 oz gold ore. An expensive project, the Duport property awaits higher gold prices in the $400-$500(US) range to be considered for production, the company said.

Conwest hold 18% of Highwood Resources (TSE) which holds a beryllium project at Thor Lake, Ont., and a zirconium claim in Greenland.

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