Higher metal prices and strong performances from its newest mines have propelled
The company earned $109.5 million (or 60 per share) on revenue of $666 million in the first quarter ended March 31, 2000, compared with a loss of $8.3 million (6 per share) on revenue of $438 million in the corresponding period of 1999. Operating income between the two periods increased to $173.4 million from a loss of $4.2 million.
The big boost in earnings is mostly attributable to higher realized prices for all of Falconbridge’s base metal output: nickel prices in the first quarter increased to US$4.21 per lb. (from US$2.13 per lb. a year ago); ferronickel rose to US$3.96 per lb. (from US$1.97 per lb.); copper jumped to US82 per lb. (from 64 per lb.); and zinc rose to 56 per lb. (from US50 per lb.).
As well, Falco’s revenues at its Integrated Nickel Operations from byproduct precious-metals — including an unusually robust contribution from platinum group metals — almost doubled during the quarter to $45.6 million from $24.5 million a year ago.
During the recent quarter, the company’s share of mine production totalled: 14,765 tonnes nickel and 7,693 tonnes ferronickel (13,563 tonnes and 1,987 tonnes, respectively, a year ago); 69,719 tonnes copper (compared with 75,487 tonnes); 18,994 tonnes zinc (compared with 33,426 tonnes); and 470,000 oz. silver (compared with 1.1 million oz.).
Of note, cash costs at the Raglan mine fell to US$1.18 per lb. nickel while first-quarter production increased to 5,439 tonnes nickel and 1,465 tonnes copper, up from 4,104 tonnes and 1,022 tonnes, respectively, a year ago.
In Chile, milling rates at the Collahuasi copper mine have reached 67,000 tonnes per day, up from the original design capacity of 60,000 tonnes, though lower head grades meant that Falco’s 44% share of first-quarter production fell to 44,995 tonnes from 50,366 tonnes. Still, the company’s share of Collahuasi’s first-quarter earnings rose to $18.7 million, compared with $7.7 million a year ago.
The remainder of Collahuasi is split between
At Falco’s Kidd Creek copper-zinc operation in Timmins, Ont., mine tonnage fell as a result of the ground-control problems experienced late last year. Consequently, both copper and zinc grades proved disappointing.
Kidd’s copper smelter returned to normal operations in mid-February following an unplanned 46-day shutdown during which time a converting furnace was upgraded.
During the quarter, Falco concluded two collective agreements: a 26-month contract with production and maintenance workers at the Raglan nickel-copper mine in Quebec, where unionized workers are represented by the United Steelworkers of America Local 9499; and 36-month contract with production and maintenance workers at Falcondo, the company’s subsidiary in the Dominican Republic.
Regarding its 1,250 production and maintenance workers in Sudbury, Falco has begun negotiations with the Canadian Auto Workers Local 598, with bargaining scheduled to begin May 2, 2000. The current 3-year contract expires Aug. 1, 2000.
At the recent annual meeting in Toronto, President Oyvind Hushovd said that while Falconbridge “may look passive right now,” the company is considering embarking on a major expansion phase in several years, once the long-term debt load of $932 million has been sufficiently reduced. The company’s cash position stands at $175 million.
The benefits of high global nickel prices have finally worked their way down to
During the first quarter, the nickel major posted net earnings of US$95 million (49 per share) on revenue of US$774 million, compared with a net loss of US$16 million (13) on revenue of US$438 million during the corresponding period last year. Fourth-quarter earnings in 1999 were US$27 million on revenue of US$631 million.
Inco’s first-quarter deliveries totalled: 66,698 tonnes of nickel in all forms (compared with 62,030 tonnes a year ago); 34,527 tonnes copper (34,686 tonnes); 389 tonnes cobalt (466 tonnes); 89,000 oz. platinum group metals (105,000 oz.); 20,000 oz. gold (14,000 oz.); and 350,000 oz. silver (395,000 oz.).
The company’s realized prices for nickel and copper in the first quarter were US$4.24 per lb. and US84 per lb., respectively, compared with just US$2.35 and US66 a year ago.
Contributing to earnings was a reduction in cash costs, which fell during the first quarter to US$1.21 per lb. nickel (after byproduct credits), compared with a US$1.33 per lb. a year ago.
The strong quarterly earnings allowed Inco to put a small dent in its total long-term debt, which stood at US$1.32 billion on March 31.
In the boardroom, George Halatsis will soon replace Chief Financial Officer Anthony Munday, who is retiring after 27 years. Halatsis was previously CFO for Canadian Pacific Railway.
Earlier in the month, Inco announced that its new high-grade Totten discovery, near Sudbury, Ont., contains total resources of 8.4 million tonnes grading 1.42% nickel, 1.9% copper and 4.7 grams platinum group metals per tonne, including inferred resources of 1.6 million tonnes at 1.26% nickel, 1.61% copper and 5.7 grams PGM.
The company says exploration drilling will continue to follow the mineralized body to the south and at depth, where grades appear to be increasing. As well, several new targets identified by geophysical surveying will be drill-tested.
Inco expects to complete a feasibility study of the Totten deposit before autumn.
Inco is spending US$7.7 million at its Ontario Division this year on underground and surface exploration — its highest exploration expenditure there since the late 1970s.
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