Zinc, copper prices boost Cominco earnings

The company reported earnings of $175.5 million for the nine months ended September 30, up considerably from the $128.3 million reported for the comparable period last year.

Cominco noted, however, that earnings were reduced by the loss of copper production in the third quarter due to the strike at the Highland Valley Copper mine in British Columbia. Despite the strike, the mining and integrated metals business segment reported a pre-tax operating profit of $331.4 million, compared with $249.4 million in the comparable 1988 9-month period.

Earnings for the 1989 third quarter were $34.2 million or 42 cents per common share on sales of $330.5 million, compared with earnings of $49.8 million for the same quarter last year. The company attributed this decline to the strike, to losses in the fertilizer division, and to increased exploration expenditures.

Despite speculation by some analysts that base metal prices may be headed for a downturn, Cominco called the outlook for metal prices “good” and the demand for its products “strong.” The major mining company is not anticipating any serious decline in demand for either zinc or copper, its most important products.

Earlier this year Cominco and Teck Corp. (TSE) entered into agreements with Aur Resources (TSE) that will result in the two associated companies collectively holding 19% of the issued common shares of Aur.

Cominco noted that drilling results on Aur’s joint venture copper-zinc massive sulphide deposit near Val d’Or, Que., “have continued to be encouraging.”

More recently Cominco purchased 2,193,000 shares of Geddes Resources (TSE) which owns the Windy Craggy copper property in northwestern British Columbia. As a result of the transaction, Cominco will own 4.24 million shares, or about 17% of Geddes, plus 501,000 common share purchase warrants.

Cominco said at the time it would consider purchasing additional shares of Geddes, “if the opportunity arises.” The company stressed, however, that it had no present intention of making a formal takeover bid.

In other news, Cominco is reporting excellent progress on construction of the Red Dog base metal mine in Alaska. Tune-up operations are expected to begin shortly. Construction of the new lead smelter at Trail, B.C., is also reported to be progressing well, with start-up scheduled for this month.

On a less positive note, the company said the recent “expensive” settlement ending the strike at Highland Valley Copper will have an impact on the mine’s competitive position if copper prices drop to levels experienced in the past.

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