Cominco Resources Int’l. follows joint venture strategy

In order to reduce cash outlays for exploration, Cominco Resources International (TSE) has formed or is negotiating joint ventures for many of its exploration projects. In most cases the company will retain majority ownership, with the partners providing varying levels of ongoing funding. In the U.S., for example, parent Cominco (TSE) will be participating on a joint venture basis on all the company’s base metal and gold properties, except for the Sheep Creek, Glenbrook, Buckhorn, Alder Gulch and Kinsley Mountain properties.

Joint ventures with Cominco were also arranged for base metal properties in Bolivia and Turkey, although Cominco Resources will retain its 100% owned Cerattepe property in Turkey where recent drilling encountered high-grade copper and precious metals mineralization.

And joint ventures with Cominco and other parties are under consideration on a number of gold properties in Mexico, Bolivia, Honduras, Chile and Turkey.

Cominco Resources also took steps to seek a purchaser for its interests in the Lobo gold deposit and other mineral properties in Chile’s Maricunga district.

The properties scheduled for divestment are near the Marte mine owned 25.7% by Cominco Resources. This heap leach operation produced only 6,840 oz. gold in 1990, about 28% of its planned level.

The performance level of the plant at Marte is reported to be well below the standards defined in the feasibility study. The mine is now heavily burdened by debt, and Cominco Resources believes it is unlikely to recover its investment.

However, all cash requirements for the operation are being funded by loans from an affiliate of Anglo American, the majority shareholder of the mine.

Cominco Resources reported operating losses in 1990 from the joint venture Buckhorn gold mine (76.4%) in Nevada and from the Glenbrook nickel smelter (50%) in Oregon. But a small profit was reported from the Maria copper mine (49%) in Mexico which entered commercial production late last year. The mine is expected to achieve an operating rate of 500 tons per day during the first quarter of 1991.

The company is considering various financing options, including joint ventures and bank financing, for funding its 42.5% participation in the Quebrada Blanca copper project in Chile, now at the feasibility stage. And it is also considering bringing in a joint venture partner to finance an ore importation project at the Glenbrook nickel smelter aimed at increasing production rates and reducing unit costs.

Cominco Resources spent $14.1 million on exploration and development of projects in 1990, of which $6.7 million was for projects in the U.S. Cominco Resources International (TSE) 3 months ended Dec. 31 1990 1989 Revenue $8,369 $3,410 Net earnings (loss) (8,584) (5,028)

per share (0.16) (0.13) 12 months ended Dec. 31 Revenue $26,690 $12,019 Net earnings (loss) (30,698) (13,145)

per share (0.65) (0.35)