An example of what COPPER PRICES have done even to a big name like TECK- One Penny Per Share Plus in yr to yr comparison-- they were liucky but see lower where I BOLD the 20 cents a pound fall in Copper Prices:( Repeat...this is On Topic only< not as such JABA NEWS> as respect to trend of last year with OTHER companies )
Teck Corp -
Teck three-month results
Teck Corp TEK.B
Shares issued 92,639,739 1999-04-21 close $12.25
Thursday Apr 22 1999
Mr. Norman Keevil reports
For the first quarter ended March 31, 1999, Teck reports net earnings of $1.8-million, or two cents per share, compared with $1.1-million or one cent per share in 1998. Earnings from operations before equity accounting were $765,000, compared with $2.4-million in the prior year. First quarter equity earnings from Cominco were $988,000, compared with an equity loss of $1.4-million in 1998.
Cash flow from operations, before working capital adjustments, was $24-million in the first quarter, compared with $28-million in the same period last year.
Weak metal prices continued to have a negative effect on the company's earnings and cash flow. Increased gold production, notably from the Tarmoola mine, resulted in higher cash operating profit from gold operations, offsetting the lower operating profits from copper and coal. Total cash operating profit from mine operations in the first quarter was $43-million, compared with $44-million in the same period last year.
At March 31, working capital was $183-million including cash and short-term investments of $130-million. Long-term debt, excluding the Inco-related exchangeable debentures, was $455-million or 23 per cent of total capitalization.
OPERATIONS
Gold production totalled 126,000 ounces in the first quarter, up substantially from 93,000 ounces last year. The Tarmoola mine contributed 49,000 ounces, compared with 25,000 ounces in 1998, reflecting both a 37 per cent increase in mine production and the full consolidation of Tarmoola's results in the current period. Cash operating costs at the Tarmoola mine averaged $191 (U.S.) per ounce in the period. Gold production at the Hemlo mines increased by 7,000 ounces to 73,000 ounces, at an average cash operating cost of $213 (U.S.) per ounce, in the quarter. The consolidated realized gold price, including hedging gains, was $325 (U.S.) per ounce, compared with $327 (U.S.) in 1998. Offsetting the lower gold price was an average Canadian/U.S. dollar exchange rate of 1.51, compared with 1.43 in the first quarter of 1998.
Copper production of 33 million pounds in the first quarter was 9 per cent higher than in 1998 with higher ore grades at Louvicourt adding 2.1 million pounds to production. Copper prices, including hedging gains and settlement adjustments, averaged 72 U.S. cents per pound, compared with 90 U.S. cents per pound in the same period last year.
Metallurgical coal production from the Elkview and Bullmoose mines totalled 907,000 tonnes in the quarter, a decrease of 202,000 tonnes from 1998 production levels. Production rates at both mines were reduced due to high port inventory levels resulting from slower shipments to the Japanese steel mills. Compared with the first quarter of 1998, coal prices declined at Elkview and Bullmoose by approximately 5 per cent.
At quarter end, the company's hedge program provided price protection on 177,000 ounces of Canadian gold production over the next four years at an average price of $385 (U.S.) per ounce, and 1.2 million ounces of Australian gold production over nine years at an average price of $552 (Australian) per ounce. Copper forward positions totalled 43 million pounds at an average price of 81 U.S. cents per pound, of which 32 million pounds will be realized in 1999. In addition, the company has U.S. currency hedges totalling $394-million (U.S.) at an average exchange rate of 1.43 over the next five years.
EQUITY EARNINGS
Cominco contributed equity earnings of $988,000 in the first quarter, compared with an equity loss of $1.4-million in 1998. Higher zinc production at the Trail and Cajamarquilla refineries and improved operating performance at the Trail Kivcet lead smelter contributed to the increase in earnings. The average LME zinc price was 45 U.S. cents per pound in the first quarter, compared with 48 U.S. cents per pound a year ago.
CORPORATE DEVELOPMENT
In January, the company's holding in Inco VBN shares was sold for net proceeds of $30-million. During the first quarter the company acquired 3,378,000 shares of Cominco Ltd. at an average cost of $19.40 per share, bringing the total number of Cominco shares owned to 33,028,215 shares as of March 31.
In Stockwatch April 20, Teck announced that it reached agreement to sell $150-million of 25-year exchangeable debentures. Each $1,000 debenture is exchangeable into 42.5532 Cominco shares ($23.50 per share) and, on exchange or redemption, the company has the option to pay cash or deliver Teck Class B subordinate voting shares of equivalent value. The debentures have a coupon rate calculated at 2 per cent above the Cominco dividend rate with a current indicated yield of 3.28 per cent. This private placement is scheduled to close on or about April 28, 1999. The proceeds of the issue will be used for capital projects, investments and general corporate purposes.
Concurrent with the closing of the debenture, Teck has agreed to purchase by private transactions an additional 1.5 million shares of Cominco at $22.75 per share, bringing its total holding in Cominco to 34,528,215 shares or 40.4 per cent of the shares outstanding.
PROJECT DEVELOPMENT
The development of the Antamina copper, zinc project in Peru is progressing well. Site development work has started, permanent access road construction is near the half-way mark and detailed engineering work is 15 per cent complete. Major pit equipment is being moved to site to commence waste stripping. Project financing is expected to close in the summer of this year. As at the quarter end, the company's investment in the project was $106-million out of a total projected investment of $325-million, net of project financing.
The participants in the Antamina project announced in Stockwatch March 26, that agreement had been reached to sell 10 per cent of the project to Mitsubishi Corporation for approximately $54-million (U.S.). The sale, which will reduce Teck's ownership on a pro rata basis from 25 per cent to 22.5 per cent, is subject to certain conditions including settlement of definitive documentation and closing of $1.26-billion (U.S.) of project financing. In connection with the transaction, Mitsubishi Materials and other Japanese smelters are expected to purchase 200,000 dry metric tonnes of copper concentrates and 80,000 dry metric tonnes of zinc concentrates annually from the mine and the Export-Import Bank of Japan has been requested to take a significant position in the project-financing syndicate.
In March, the Pogo gold project in Alaska received the necessary permits to conduct an underground exploration program. The program will consist of driving an adit of 5,200 feet to obtain geotechnical data, confirm the continuity of the orebody and obtain a bulk sample for metallurgical testing. A surface exploration program of 25,000 feet is planned to start in May. A prefeasibility study will be conducted in the fall and a final feasibility study is expected to be completed by the end of 2000.
PacMin, Teck's Australian subsidiary, completed the acquisition of the Carosue Dam gold property south of the Tarmoola mine in the first quarter. A drilling program has commenced with over 20,000 metres of reverse circulation drilling and 1,000 metres in HQ diamond drilling having been completed. The resource, originally estimated at 1.2 million ounces, will be recalculated based on the drilling results following which a feasibility study will be conducted. Subject to a successful feasibility study, the Carosue Dam orebody has the potential to produce in excess of 130,000 ounces of gold annually.
YEAR 2000
The company's Year 2000 compliance program is progressing according to plan. Assessment and remedial work on critical systems at its operating units and corporate office are essentially complete and will be reviewed by independent experts in the second quarter. The company is currently developing contingency plans, and continuing communications with critical third parties. The estimated total cost of the company's Year 2000 compliance program remains approximately $1-million. A more detailed description of the company's Year 2000 compliance program is posted on the company's Web site.
PRODUCTION
Three months ended March 31
1999 1998
Gold (ounces) 125,968 92,871
Coal (tonnes) 907,045 1,108,550
Copper (pounds) 33,324,691 30,445,027
Zinc (pounds) 21,243,392 15,902,617
Ferroniobium
(pounds) 647,699 602,084
CONSOLIDATED STATEMENT OF EARNINGS
Three months ended March 31
(thousands of dollars)
1999 1998
Revenues
Mining $ 163,589 $ 164,157
Other income 3,274 4,590
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166,863 168,747
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Expenses
Mining
operations 120,207 119,937
Depreciation and
amortization 25,560 23,218
Administration 4,498 2,600
Interest 11,430 10,739
Mineral
exploration 5,257 8,043
---------- ----------
166,952 164,537
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(89) 4,210
Income and
mining tax
recovery
(provision) 1,673 (1,768)
Minority interest (819) -
---------- ----------
Earnings before
the following 765 2,442
Equity in earnings
(loss) of associated
companies 988 (1,379)
---------- ----------
Earnings $ 1,753 $ 1,063
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Earnings per
share 2 cents 1 cent
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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