Falconbridge Ltd FL
Shares issued 177,041,400 Jan 29 close $15.70
Tue 30 Jan 2001 News Release
Mr. Oyvind Hushovd reports
Falconbridge had consolidated earnings of $368.3-million ($2.01 per common
share) for 2000, compared with earnings of $153.1-million (80 cents per
common share) in 1999.
Falconbridge president and chief executive officer, Oyvind Hushovd, said:
"From an earnings standpoint, we've had an excellent year. Earnings of
$368.3-million are the highest in our company's history and our cash flow
almost doubled to $657-million. Our new operations, Raglan and Collahuasi,
exceeded their production targets. With the higher metal prices and our
expanded mining capacity, we achieved a 17-per-cent return on equity."
Revenues were $2,614.6-million in 2000, up $441.1-million or 20 per cent
from 1999 while operating income of $523.4-million improved by
$266.2-million or 103 per cent. Both increases reflect significantly higher
metal prices. In particular, Falconbridge's average realized price for
nickel increased by 47 per cent from $2.78 (U.S.) to $4.09 a pound. Higher
oil, gas and electricity prices reduced operating income by $63-million
over 1999 levels, while higher exploration and research and development
expenditures reduced operating income by another $25-million.
The annual earnings were adversely affected by an after-tax cost of
$54.8-million (31 cents per common share) associated with the strike by the
production and maintenance workers at the corporation's Sudbury operations.
A tax benefit of $36.5-million (21 cents per common share) positively
affected the results and was related to the revaluation of the future tax
liability due to the reduction in future tax rates in Ontario.
Cash generated from operations, before changes in accounts receivable,
inventories and payables, totalled $643.9-million, compared with
$455.0-million for 1999. After working capital changes, cash generated from
operations was $657.4-million, almost double 1999 levels. Capital
expenditures and deferred project costs were $249.6-million for the year.
During 2000, dividend payments increased from $84.4-million to
$86.8-million. Cash and temporary investments increased to $250.4-million
as of Dec. 31, 2000, compared with $101.5-million at the end of 1999. In
2000, working capital increased to $639.9-million from $527.1-million at
the end of 1999.
Fourth quarter results
In the fourth quarter of 2000, Falconbridge recorded a consolidated profit
of $40.9-million (21 cents per common share), compared with a profit of
$93.9-million (51 cents per common share) for the same quarter of 1999.
Fourth quarter earnings were negatively affected by an after-tax cost of
$30.6-million (17 cents per common share) associated with the strike at the
Sudbury operations.
Fourth quarter consolidated revenues of $589.5-million compare with
$661.4-million for the same period of 1999, while operating income of
$48.2-million was $95.2-million lower. Both decreases reflect lower sales
volumes for Falconbridge's main metals. Compared with the same quarter last
year, the affect of higher oil, gas and electricity prices reduced
operating income by $20.8-million, most of which was related to the
Falcondo operations. During the quarter, cash flow from operations was
$79.1-million as compared with $177.7-million for the same period of 1999.
Operations
Integrated nickel operations
On Aug. 1, 2000, 1,250 production and maintenance workers in Sudbury (CAW
Local 598) went on strike. Since then, the mines have been operating at
approximately 20 per cent of normal production levels while the smelter has
been operating at 50 per cent to 60 per cent of normal capacity with
deliveries from Raglan, concentrate inventories and mine output. Metal
production in concentrate declined to 23,200 tonnes of nickel from 35,700
tonnes in 1999. At Raglan, the mill operated at the one-million-tonne ore
rate during the last half of the year. Metal production in concentrate
increased from 19,500 tonnes of nickel to 23,100 tonnes during 2000.
Raglan's production for 2001 is forecast at 24,000 tonnes of nickel. The
Nikkelverk refinery operated below capacity due to the shortages of feed
from Sudbury operations. Refined nickel output for the year fell to 58,700
tonnes from 74,100 tonnes in 1999.
The INO's income contribution for the three months ended Dec. 31, 2000, was
$17.5-million as compared with $84.7-million for the same period of 1999.
The decrease is related to significantly lower sales volumes and costs due
to the strike, which were partially offset by higher precious metals
revenues.
Falconbridge Dominicana, C. por A. (Falcondo)
Falcondo's nickel in ferronickel production was 27,800 tonnes in 2000, up
from 24,500 in 1999. Falcondo's planned production rate in 2001 is
estimated at 29,000 tonnes.
The corporation's share of Falcondo's earnings for the three months ended
Dec. 31, 2000, was $5.8-million as compared with $9.4-million for the same
period of 1999. The result reflects the affect of higher oil prices and
lower sales volumes, partially offset by higher ferronickel prices.
Production during the quarter was lower than for the same period in 1999
due to unplanned maintenance at the power plant and electric furnaces.
Kidd operations
At the Kidd mining division, copper production decreased to 54,900 tonnes
of copper in concentrate in 2000 from 67,400 tonnes in 1999. Zinc
production declined to 82,700 from 96,300 tonnes in 1999. The lower metal
production is due to lower ore grades.
The Kidd mining division is continuing to assess the affect of a recent
ground movement at its No. 1 mine. Production in the affected areas has
been halted until engineering and geotechnical assessments have been
completed, which could take several weeks. Preliminary assessments indicate
that approximately 15 per cent of Kidd's overall production tonnage could
be affected this year. Kidd will attempt to offset any production
shortfalls by increasing production from other areas of the No. 1 mine, or
from the No. 3 mine. Based on long-term mine plans, lower copper grades
were forecast for this year. They are expected to return to normal levels
later in the year. The ground movement will have a greater affect on zinc
production in 2001 because of the higher zinc grades in the No. 1 mine. The
temporary affect on production will mainly be felt during the first
quarter. Annual production in 2001 is now estimated at 45,000 tonnes of
copper in concentrate and 80,000 tonnes of zinc in concentrate. No affect
is anticipated on the copper smelter, copper refinery or zinc plant, as
they will continue to operate with purchased and stockpiled concentrates.
In 2000, zinc plant production at the Kidd metallurgical division increased
to 141,400 tonnes from 131,100 tonnes in 1999, while copper cathode
production was essentially unchanged at 123,000 tonnes. Copper cathode
production in 2001 is forecast at 145,000 tonnes while zinc production is
estimated at 147,000 tonnes.
Kidd incurred a loss of $0.7-million for the three months ended Dec. 31,
2000, compared with a profit of $14.7-million in the corresponding quarter
of 1999. The decrease is due to lower mine production partially offset by a
higher ratio of custom feed.
Collahuasi
Collahuasi recorded another good year, as lower ore grades were more than
offset by higher mine production and mill throughput. Both the mill and the
oxide plant set new production records for the year. Falconbridge's share
of Collahuasi's annual copper production was 186,100 tonnes, as compared to
185,700 tonnes in 1999. At the oxide plant, Falconbridge's share of cathode
production was 25,600 tonnes as compared with 22,500 tonnes in 1999, while
copper in concentrate was 160,500 tonnes as compared with 163,200 tonnes.
Falconbridge's share of production in 2001 is forecast at 176,000 tonnes.
Falconbridge's share of Collahuasi's earnings for the three months ended
Dec. 31, 2000, was $28.5-million as compared with $22.6-million for the
fourth quarter of 1999. The increase reflects higher copper prices and
sales volumes, as well as continued favourable operating costs.
Other developments
In New Caledonia, 70,600 metres of diamond drilling on the Koniambo deposit
has been completed since the program began in August, 1998. The
pyrometallugical inferred mineral resource is now estimated at 151 million
tonnes grading 2.58 per cent nickel, leading to the potential development
of a 60,000-tonne-per-year nickel in ferronickel plant.
Dividend payments
On Jan. 30, 2001, the board of directors declared dividends of 10 cents per
common share payable Feb. 23, 2001, to shareholders of record Feb. 9, 2001,
and of two cents per preferred share Series 1 payable March 1, 2001, to
shareholders of record Feb. 15, 2001. For preferred shares Series 2, a
dividend of 36.72 cents per share was declared and is payable on March 1,
2001, to shareholders of record Feb. 15, 2001.
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended Dec. 31
(in thousands of dollars)
2000 1999
Revenues $589,485 $661,404
-------- --------
Operating expenses
Costs of metal and
other product sales 409,767 406,383
Selling, general and
admin 33,328 27,727
Development and
reproduction 17,650 22,185
Depreciation and
depletion 56,844 49,703
Exploration 11,254 7,622
Research and process
development 12,426 4,363
-------- --------
541,269 517,983
-------- --------
Operating income 48,216 143,421
-------- --------
Interest on debt
and debt expenses 31,814 29,676
Interest and other
(income) expenses,
net (14,908) (10,213)
Income and mining
taxes (10,539) 28,438
Non-controlling
interest in
earnings 996 1,618
-------- --------
7,363 49,519
-------- --------
Earnings for the
period $40,853 $93,902
======== ========
Dividends on
preferred shares 3,002 2,931
Earnings
attributable to
common shares $37,851 $90,971
Earnings per common
share $0.21 $0.51
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended Dec. 31
(in thousands of dollars)
2000 1999
Revenues $2,614,596 $2,173,479
---------- ----------
Operating
expenses
Costs of metal
and other
product sales 1,604,588 1,469,524
Selling, general
and admin 122,072 104,573
Development and
reproduction 71,562 81,493
Depreciation and
depletion 219,200 211,599
Exploration 45,815 34,654
Research and
process
development 27,971 14,435
---------- ----------
2,091,208 1,916,278
---------- ----------
Operating
income 523,388 257,201
---------- ----------
Interest on debt
and debt
expenses 124,312 116,823
Interest and
other (income)
expenses, net (29,817) (47,335)
Income and mining
taxes 52,643 31,542
Non-controlling
interest in
earnings 7,977 3,074
---------- ----------
155,115 104,104
---------- ----------
Earnings for the
period $368,273 $153,097
========== ==========
Dividends on
preferred shares 11,795 11,621
Earnings
attributable to
common shares $356,478 $141,476
Earnings per
common share $2.01 $0.80
Production
Three months ended Dec. 31
2000 1999
Mine production (tonnes)
Sudbury
Nickel 2,038 8,415
Copper 929 8,682
Raglan
Nickel 6,312 5,268
Copper 1,718 1,324
Kidd mining division
Copper 10,909 22,930
Zinc 19,384 21,502
Silver (000s ounces) 665 1,145
Falcondo
Ferronickel 6,487 7,596
Collahuasi
Copper 45,493 44,432
Metal production
(tonnes)
Sudbury -- smelter
output
Nickel 9,563 13,621
Copper 2,543 5,278
Nikkelverk --
refinery output
Nickel 10,673 17,457
Copper 4,649 8,260
Kidd metallurgical
division
Zinc plant output --
zinc 34,539 36,295
Copper cathode --
refinery output 35,846 32,002
Blister copper 35,592 30,195
Falcondo
Ferronickel 6,486 7,596
Collahuasi
Copper 6,602 5,870
Production
Year ended Dec. 31
2000 1999
Mine production (tonnes)
Sudbury
Nickel 23,234 35,678
Copper 20,990 40,999
Raglan
Nickel 23,089 19,524
Copper 6,308 4,930
Kidd mining division
Copper 54,926 67,429
Zinc 82,655 96,292
Silver (000s ounces) 2,437 3,622
Falcondo
Ferronickel 27,830 24,454
Collahuasi
Copper 186,073 185,739
Metal production
(tonnes)
Sudbury -- smelter
output
Nickel 47,439 55,767
Copper 15,160 20,173
Nikkelverk --
refinery output
Nickel 58,679 74,137
Copper 25,307 33,262
Kidd metallurgical
division
Zinc plant output --
zinc 141,375 131,078
Copper cathode --
refinery output 122,987 121,278
Blister copper 124,529 122,966
Falcondo
Ferronickel 27,829 24,454
Collahuasi
Copper 25,579 22,573
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