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An extensive airborne electromagnetic geophysical survey of some 16,000 line km has been completed, and follow-up work is in progress. This past spring, one anomaly was tested with six holes over an area covering 1.5 by 2 km. Disseminated sulphide mineralization with weakly anomalous nickel and copper values was cut over “significant” thicknesses.
“The results to date are encouraging,” says Chief Executive Officer Hugh Morgan.
Last year, the major acquired exploration licences covering 13,000 sq. km south of Ungava Bay. WMC has been exploring the western margin of Rae province, east of the Labrador Trough.
The company has found several nickel sulphide gossanous outcrops and generated a number of anomalies. “We have not yet come forward with something that would cause great commercial excitement, but the work that is being done there to date is very encouraging,” says Morgan. WMC spent A$4.2 million on the Quebec project during the first half of the year.
Declining metal prices have taken their toll on WMC. The company posted earnings of A$274.3 million (or 24.9 per share) for the six months ended June 30, compared with a profit of A$402.7 million (35.1 per share) in the first half of 2000. The drop in earnings reflects lower prices in all main commodities.
Half-year sales totalled A$1.56 billion, against A$1.52 billion a year ago. Operating cash flow increased 8.8% from the first half of last year to A$784.6 million. Production was up for copper, uranium, aluminum, fertilizer and gold.
The Olympic Dam mine in South Australia turned in a strong performance, which will be further boosted by an optimization expansion to 235,000 tonnes of refined copper per year, to be completed in mid-2002. The cost of the expansion is A$85 million. Refined copper production at Olympic Dam for the half-year was above nameplate capacity at 103,889 tonnes. Uranium production was also stronger, at 2,292 tonnes, with record gold and silver production of 59,000 oz. and 460,000 oz., respectively.
Olympic Dam achieved an operating profit of A$85.3 million, against A$38.5 million in the first half of last year.
WMC’s share of alumina production, held through its 40% stake in Alcoa Worldwide Alumina & Chemicals (AWAC), decreased by 6% to 2.5 million tonnes. Operating profit was A$159.1 million after taking into account A$81.2 million in writedowns. This compares with a profit of A$195.7 million in the first half of last year. Escalating power prices in the northwestern U.S. led to the closure of the St. Croix refinery and curtailed production at Point Comfort. Four assets within AWAC were written off during the six months.
Nickel operations posted an operating profit of A$165.7 million, versus A$293 million in the first half of 2000. Production of nickel in matte was off 6% from the year-earlier period at 47,030 tonnes, while nickel metal declined by 6.5% to 28,080 tonnes. Nickel in concentrate totalled 51,151 tonnes. Nickel production is expected to be higher during the second half of this year.
The fertilizer unit operated at an average capacity of 76% during the first six months of 2001, with 90% of capacity achieved in May. The division posted a loss of A$17.1 million, compared with A$51.1 million in losses a year ago.
Gold production for the half-year was up 21% at 414,571 oz., including 70,000 oz. from Olympic Dam operations. The gold unit generated an operating profit of A$31.7 million, versus A$32.3 million in 2000.
“The potential sale of our respective gold interests remains under review and we should be better able to report on that toward the end of the next quarter,” says Morgan.
WMC continues to advance a new nickel discovery at West Musgrave in Western Australia. Drill assays are available for 22 holes to date. Results so far show variable widths of both disseminated and massive nickel mineralization in two prospects along a 4.5-km-long system. An airborne electromagnetic survey is being flown over the project area in preparation for follow-up ground work.
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