A year of record-low zinc prices translated into a $111-million loss for
By comparison, the company posted a loss of $8.7 million (10 per share) for 2000.
Revenue between the two periods climbed slightly to $302 million from $300 million.
The recent loss includes $70.3 million in non-cash writedowns on properties and fixed assets, compared with $27.1 million in writedowns in 2000. Mining operations lost $23.5 million during 2001, compared with $36.8 million in the previous year.
On a positive note, output improved over the year. Breakwater produced 211,544 tonnes zinc in concentrate in 2001, compared with 208,996 tonnes in the previous year, as well as 6,932 tonnes copper in concentrate, compared with 4,532 tonnes, 13,174 tonnes lead in concentrate, compared with 11,021 tonnes, 2.9 million oz. silver, compared with 2.8 million oz., and 38,500 oz. gold, compared with 20,289 oz.
Total cash costs per tonne of payable zinc fell to US$790 from US$880 between the two periods.
Breakwater’s top producer during the year was the Nanisivik mine in Nunavut, which cranked out 51,512 tonnes zinc in concentrate, down from 59,399 tonnes in 2000. Silver production likewise slipped, to 539,380 oz. from 567,707 oz.
The mine, situated on Baffin Island, is due to close in September.
Zinc prices declined steadily during 2001, from US$1,018 per tonne (US46 per lb.) at the beginning of the year to just US$750 per tonne (US34 per lb.) at year-end. The decline forced the company to restructure its banking arrangements and commit to raising additional equity.
In November 2001, the company reached a refinancing deal with Dundee Bancorp, a major shareholder. The deal calls for Breakwater to complete a $15-million rights offering to shareholders. Proceeds should be sufficient for cash requirements until year-end.
However, the company warns it will not be able to repay its debt under existing credit facilities unless metal prices improve.
Meanwhile, the company is considering expanding production at the El Toqui mine in Chile and reopening the Langlois mine in Quebec and the Caribou mine in New Brunswick.
At the end of 2001, working capital stood at $5 million, compared with $23.9 million at the end of 2000; cash and cash equivalents were $3.3 million, down from $4.7 million. Total debt amounted to $80.4 million.
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