Boliden’s Canadian launch off to strong start — Low operating costs translate into profits

Newly incorporated in Canada, and sporting 11 European mines and two smelters from parent company Trelleborg, Boliden (bol.ir-t) has seen its first-half earnings increase 55%, compared with those reported for the first six months of 1996.

Boliden, which was incorporated last April and spun off as a publicly traded company in June, reported earnings of US$37.9 million (US38 cents a share) on revenue of US$536 million for the first half of 1997. The operations represented by the new company turned a US$24.5-million profit on US$627 million in revenue during the same period in 1996.

The higher earnings were credited to substantially lower operating costs in the period, which more than offset the lower revenue. Increased zinc prices and the declining value of Swedish, Norwegian and Spanish currencies (in which Boliden incurs most of its operating expenses) also pushed operating costs lower.

In the second quarter, earnings were US$20.6 million on revenue of US$304 million, compared with US$12.4 million on US$333 million in the same period of 1996. Mill throughput was higher, but ore grades lower, at the company’s mines in the Boliden district in Sweden, and consequently production of concentrate fell slightly.

In contrast, the company’s Aitik copper mine, also in Sweden, produced a record 23,124 tonnes of copper concentrate in April on the strength of higher ore grades.

Boliden’s Spanish operations are in transition, with the Aznalcollar zinc mine now out of production and the Los Frailes zinc project in the startup phase. Full production, and a return to pre-1996 production levels, is expected by late 1997.

In Saudi Arabia, where Boliden owns a half interest in the SCPM gold project, gold production fell, as problems at the crusher plant restricted mill throughput. The lower throughput was partly offset by higher gold grades. A proposed pit expansion is being studied.

Among Boliden’s smelting operations, the star performer was the 50%-owned Norzink zinc smelter in Norway, where production increased at a time when zinc prices headed upward. The wholly owned Ronnskar copper smelter in Sweden was shut down for five days so that the electric furnace could be repaired, cutting into that unit’s revenue.

The Los Frailes mine received US$15 million of the company’s US$38.4-million capital budget in the second quarter; the first section of the mill’s grinding circuit is now complete, as are the lead and copper flotation circuits. The plant is expected to be ready for full production in the last quarter of the year.

Exploration continues at the property scale around Boliden’s Swedish mines, with exploration at the Renstrom polymetallic mine concentrating on the orebody’s extension to depth. Infill drilling from the 800-metre and 960-metre levels of the mine is under way, on a zone where previous drilling indicated a resource of 2 million tonnes grading 12.7% zinc. Extensions of known mineralization have also been identified at the Garpenberg and Kristineberg mines.

Also in Sweden, Boliden has 8,000 sq. km under exploration permits, up from 1,000 sq. km in 1995, and is planning ramp development at its Akulla East gold project in the Skelleftea district.