Teck Cominco to extend Highland Valley, Trail talks fail

Diversified miner Teck Cominco (TEK.SVB-T) will spend $40 million to extend the life of the Highland Valley open-pit copper mine, 60 km southwest of Kamloops, B.C.

The plan involves salvaging ore from the west wall of the Lornex pit, and the relocation of two in-pit crushers and a push back to the east of the pit walls in the Valley pit. The two in-pit crushers feed a 12,000-tonne-per-hour conveying system that delivers ore to stockpiles at the mill. Concentrates are transported by rail eastward to domestic markets and to Vancouver for shipment to overseas markets.

The company has completed geotechnical studies to address pit wall stability issues related to the extension. The scheme will extend the mine’s life by around five year to September 2013.

Looking ahead, copper concentrate production over the remaining mine life is expected to average about 400,000 tonnes per year. That rate is expected to slip to around 305,000 tonnes during a transitional period of higher strip ratios and lower grades in 2008. Molybdenum production will range from about 1,360 tonnes to 3,630 tonnes annually, with an estimated average around 2,000 tonnes annually over the remaining mine life. Head grades are expected to average 0.4% copper at a strip ratio of 0.5-to-1.

“The extension of the Highland Valley mine life significantly adds to our copper production over the medium term,” said Teck CEO Don Lindsay in a prepared statement. “This is good news for the workforce at Highland Valley, for local communities and the Province of B.C., and for our shareholders.”

In 2004, Highland Valley processed a record 51 million tonnes of ore to produce 170,100 tonnes of copper, despite copper grades averaging 0.38%, the lowest since production began 20 years ago. Higher grade molybdenum and modifications to the molybdenum separation circuit boosted recovery rates from 75% to more than 90% and pushed molybdenum production to a record 4,850 tonnes. The operation also chipped in record operating profit of $431 million thanks to significantly higher copper and molybdenum prices.

During the latest second quarter, the mine turned in an operating profit of $145 million (up from $79 million a year earlier) helping Teck to record second quarter earnings of $225 million, or $1.11 per share, compared with $116 million, or 60 per share, a year earlier.

Production in 2005 is forecast at 185,520 tonnes of copper; the increase is attributed to an expected increase in head grade. Molybdenum production is expected to slip to around 2,270 tonnes on lower head grade.

At the end of 2004, Highland Valley’s proven and probable reserves stood at 166.5 million tonnes running 0.43% copper and 0.007% molybdenum.Rough Trail

Meanwhile, labour talks between Teck and striking workers at its Trail zinc-lead refinery in Trail, B.C. have broken down again, with no new talks planned.

Members of United Steelworkers of America Locals 480 and 9705 have been walking the picket lines since July 19 after negotiations broke off on July 14. The workers’ old four-year labour pact expired on May 31.

The miner has shut down the operation and declared force majeure on all metal and chemical products sales. Teck is trying to offset the financial impact of the strike by selling power from its Waneta hydroelectric dam on the nearby Pend Oreille River; the dam normally powers the smelter.