Noranda defends stake in New World project

Even when surrounded by its own shareholders, Noranda (TSE) can not avoid the controversy over the New World gold-copper-silver project in Montana.

At the annual meeting, shareholder James Barrett, a resident of Montana and president of a citizens group opposed to the project, urged the company to withdraw support for the New World mine project, which is situated 4 km north of Yellowstone National Park. “The proposal has cost a lot of money, and will continue to cost a lot of money,” he said. “Most people in the U.S. doubt this mine will ever be permitted.”

Noranda Chairman David Kerr responded by saying: “We have stated quite clearly in our report that Noranda is not going to support the mine if we believe it is going to harm the environment.”

Noranda owns 44% of Hemlo Gold Mines (TSE), which owns 60% of Crown Butte Resources (TSE) (the owner and operator of the New World Project). Under a merger agreement between Battle Mountain Gold (TSE) and Hemlo, Noranda will trade its interest in Hemlo for a 28% interest in the merged company.

At a press conference following the meeting, Kerr elaborated on his company’s position, acknowledging the project has become a public relations problem.

“The fact is, we do believe it can be operated as a safe mine that does not cause environmental damage.”

Crown Butte has invested $35 million in the New World project, which is now more than two years behind schedule in clearing the necessary American environmental assessments.

Deputy chairman Alex Balogh added that he is confident Crown Butte will be able to satisfy public concerns. “It is possible that we will have approval sometime before the end of the year,” he noted.

In another order of business, Balogh defended Falconbridge’s (TSE) low-tonnage estimate for the Voisey’s Bay nickel-copper-cobalt deposit.

Noranda owns 46% of the Toronto-based company. In making its offer in February, Falconbridge estimated the deposit contained a reserve of 100 million tonnes. Inco (TSE), however, based its bid on a reserve of 150 million tonnes.

“Depending on what you take as your cutoff grade, there could easily be 150 million tonnes there,” Balogh said. “Unless we see what [Inco is] using as a cutoff grade, and what grades they are using, we are not sure if we can compare that with what we have.”

Noranda has announced first-quarter earnings of $101 million (or 43 cents per share), compared with $110 million (46 cents per share) for the fourth quarter of 1995. The company earned $158 million (70 cents per share) for the first quarter of 1995.

Kerr cited low copper and aluminum prices, as well as a drop in pulp prices, as causes of the decrease in earnings. Noranda’s Mining and Metals division contributed $80 million to the company’s earnings, compared with $129 million a year earlier.

Noranda’s revenue for the first quarter of 1996 was $2.42 billion, compared with $2.44 billion in 1995.