Aur suffers market blues

Weak copper prices combined with a $6.6-million writedown on certain securities, properties and exploration costs resulted in a loss for Aur Resources (AUR-T) in 1998.

The company posted a loss of $2.5 million, compared with earnings of more than $3 million in 1997. Revenue between the periods dropped to $97.9 million from $116 million, and cash flow sunk to $22 million from $37.4 million.

Aur’s share of combined production from the Louvicourt and Andacollo mines in Quebec and Chile, respectively, was 70 million lbs. copper, 12.3 million lbs. zinc, 267,000 oz. silver and 9,500 oz. gold. Both mines exceeded production targets and reduced operating costs to record lows — US49 cents per lb. copper net of by-product credits at Louvicourt and US51 cents per lb. copper at Andacollo.

For the three months ended Dec. 31, Aur lost $2.6 million on revenue of $25.2 million, compared with a loss of $9.1 million on $27.4 million in the corresponding period of 1997. The loss in the recent fourth quarter was caused chiefly by writedowns on non-operating assets.

At year-end, Aur had $86 million in working capital and was debt-free, having repaid the US$34 million that it borrowed in 1998. The company foresees no material capital expenditures in the near-future.

Aur owns a 30% interest in Louvicourt and a 70% interest in Andacollo, and is operator at both. The remaining interest in the former is divided between Teck (TEK-T), with 25%, and Novicourt (NOV-T), with 45%. A private Chilean company holds the remaining interest in Andacollo, with the Chilean government retaining a 10% net profits interest.

Meanwhile, Novicourt reported 1998 earnings of $2.5 million and revenue of $46.3 million, compared with $6.9 million and $61 million in 1997. The difference stems from the low metal prices, though this was partially offset by higher zinc output, a weaker Canadian dollar and hedging.

Novicourt’s share of production from Louvicourt totalled 53.8 million lbs.

copper, 14.4 million lbs. zinc, 283,000 oz. silver and 12,728 oz. gold. That mine is its sole provider of metal production. In the fourth quarter, Novicourt lost $287,000 on $10.4 million, compared with earnings of $1.1 million on $12.5 million in the year-ago period. Again, the loss is attributed to low metal prices.