Lower metal prices squeeze first-quarter earnings of Teck

Higher gold and copper production by Teck (TEK-T) were offset by lower prices during the first quarter, resulting in a decrease in earnings.

The company reported a profit of $15 million (or 16 cents per share) for the 3-Month period, compared with $21 million (22 cents per share) in the first quarter of 1996. Cash flow slipped to $34 million from $37 million.

Contributing to the decrease were lower coal production and a higher Canadian dollar.

Mine operating costs were $119 million, similar to costs incurred during last year’s first quarter, and Teck’s share of gold production was 87,282 oz., representing a 12% increase over the same period in 1996. The increase is attributable to higher throughput, grades and recovery rates at the Williams mine, near Marathon in north-central Ontario.

Operating costs at that mine and at the nearby David Bell operation averaged US$214 per oz., compared with US$233 per oz. in the first three months of 1996. The company attributes the decrease to higher production.

The average realized gold price for the quarter was US$370 per oz., compared with US$405 a year ago.

Copper production rose 1.1 million lb. to 35 million lb., though this increase was offset by a lower realized copper price of US$1.10 per lb., compared with US$1.19 in the first quarter of 1996.

Coal production dropped 14% to 84,000 tonnes, largely as a result of poor weather, which slowed production at the Bullmoose coal mine and hindered rail transport at the Elkview coal mine. Both operations are in British Columbia.

To avoid excess inventory, Teck was forced several times to suspend production at Elkview.

Teck earned $6 million from its 28.9% holding in Cominco, compared with $7 million during the first three months of 1996.