Higher metal prices help Noranda’s balance sheet

A program of diversification was introduced and over the years different businesses have been added. Today, the minerals division of Noranda ranks second in terms of earnings, behind forestry, but ahead of the other two divisions: manufacturing and energy.

For 1988, Noranda recorded net earnings of $603 million ($3.14 per share) after extraordinary items on revenue of $8.86 billion, compared with $343 million ($2.14 per share) on revenue of $7.4 billion the previous year.

Helping to boost the company’s 1988 profits were higher metal prices. Earnings by Noranda Minerals amounted to $203 million (on revenue of $1.5 billion) compared with $141 million for 1987. Strong demand

“Each operation contributed to the success, which was driven by strong demand, high productivity and generally favorable prices, particularly for copper and zinc,” Keith Hendrick, president Noranda Minerals, said.

The division, Hendrick said, had a positive year with respect to labor relations. “There were no significant work disruptions and our sustained commitment to a safe and healthy workplace resulted in a 25% reduction in lost-time accidents,” he said.

Hendrick said eight contracts will expire this year.

Counted among the division’s assets is controlling interest in Hemlo Gold Mines (TSE), which operates the large Golden Giant gold mine at Hemlo in northern Ontario. Among the division’s promising exploration plays is a 55% interest in a large copper-silver project in Montana.

At Rouyn-Noranda, Que., construction of an acid plant at the Horne smelter is scheduled for completion this year, Hendrick said, adding that further expenditures have been committed to capture still more sulphuric acid from the operation.

Noranda Minerals, from field offices throughout North America and Australia, spent $88 million on 550 grassroots projects in 1988, with joint venture partners contributing an additional $41 million. The company says similar expenditures are planned for this year.

Development costs on 10 exploration projects last year amounted to $111 million, including $20 million from joint venture partners. First-quarter earnings

First-quarter earnings for Noranda Inc., Powis said, totalled $158 million (82 cents per share) compared with $129 million (66 cents per share) for the sam e period last year.

Powis said that 1989 could be the firm’s best year ever barring a general economic collapse and provided serious production and labor problems can be avoided by Noranda.

“We plan to continue the aggressive capital spending program at rates higher than in 1988, aimed primarily at continued efficiency improvements and product upgrading,” he said.

Asked about Noranda buying more shares (which could lead to possible control) of nickel-copper producer Falconbridge Ltd. (TSE), Powis said “there is no progress to this point. We’re still talking.” Noranda acquired a 19.9% interest in Falconbridge last year and announced its intention to boost those holdings another 10%.

During a question-and-answer period, a mining analyst for a securities firm told Powis he thinks the minerals division of Noranda is not easily understood. Another analyst wanted to know if consideration has been given to a Noranda listing on the New York Stock Exchange, which he said might introduce some volatility to the share price.

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