Metall sees lower earnings despite production increase

Despite a 7% production increase at its Copper Range copper mine in Michigan, Metall Mining (TSE) has been hit financially by some of the same factors that affected earnings reported recently by its Vancouver affiliates Teck (TSE) and Cominco (TSE). Toronto-based Metall reported net earnings of $2.9 million or 7 cents per share for the three months ended June 30, down from $12.5 million or 33 cents per share during the same period last year.

Second-quarter revenues dropped to $35.6 million from $41.3 million in the equivalent 1989 period.

Net income for the six months ended June 30 was $5 million or 13 cents per share compared with restated earnings of $21.3 million or 57 cents per share in the corresponding period last year. First-half revenues climbed to $80.2 million from $41.3 million last year. (Sales for the first half and second quarter of 1989 are identical because Metall acquired the Copper Range operation in May, 1989).

Metall attributed the drop in profits to lower copper prices realized at Copper Range and reduced earnings from both Teck and Cominco. Copper Range churned out 46.2 million lb. of equivalent copper cathode in the first half of 1990. That represented a 7% increase from the amount produced in the corresponding period last year.

However, Metall said operating costs remained high due to increased underground development expenses and high maintenance costs.

Metal holds a 10.4% stake in Cominco, which reported significantly lower earnings due to production problems at its Trail smelter, and lower output at the Highland Valley Copper in British Columbia and Pine Point Mines. Earnings reported by 10% owned Teck declined due to a decrease in the Vancouver company’s share of equity earnings in Cominco.

Also the Ok Tedi project in Papua New Guinea, in which Metall has a 7.5% interest, had a profit of $38 million in the first half of 1990, compared with $18.5 million in the equivalent 1989 period. Ok Tedi produced 225,658 oz. gold and 175.9 million lb. copper in the first half of 1990.

Meanwhile, approval was given recently for development of the Metall’s 49% owned Cayeli copper- zinc project in Turkey where reserves stand at 10.6 million tons of 4.7% copper and 7.3% zinc. Pending regulatory approval, the capital cost is expected to be around US$100 million.

Metall Mining (TSE) 3 months ended June 30 Revenue $35,596 $41,351 Net earnings 2,887 12,463

Per share 0.07 0.33 6 months ended June 30 Revenue $80,191 $41,351 Net earnings 5,053 21,334

Per share 0.13 0.57