Hello Capitale
Some news from last week that may be of interest.
First is from Inco's Quarterly Report & second is from Teck's.
The fact that Inco is still chasing geology up to 90 km away is interesting. Teck has lost $$, cut back on exploration, written off quite a few properties, and while WTC is mentioned SVB is conspicuously absent.
Voisey's Bay Update
Exploration During the fourth quarter of 1997 and through January 1998, explorationdrilling and geophysical work continued to focus on seeking extensions to theReid Brook zone and the Ovoid, including the Southeast Extension zone of theOvoid. The Reid Brook zone was originally announced in early 1997 andrepresents part of the mineralization of the overall Western Extensionsection. The Ovoid, Western Extension and Eastern Deeps sections continue torepresent the three principal sections of the Voisey's Bay nickel- copper-cobalt deposit, with existing and new zones within, adjacent to oroutside of these principal sections continuing to be explored or identified. Exploration activity was affected during the fourth quarter as a resultof the transition to a new contract drilling organization and the lateDecember 1997 holiday period. Activity is expected to increase in the firstquarter of 1998 and six drill rigs will be employed as part of the 1998exploration program. Drilling of extensions to the Reid Brook zone continued during the fourthquarter of 1997 and into early 1998. At the eastern limit of this zone, three intersections were made at a depth of 800 metres over a total of 20.6 metreswith average grades of 2.4% nickel, 0.9% copper and 0.16% cobalt. This zoneis still open to the east and a strong geophysical anomaly indicates possibledeeper extensions. Based upon the current drilling program for the Ovoid which has focusedon seeking high-grade extensions of already known zones, the Ovoid section ofknown high-grade mineralization has been found to extend to the south. Thisextension is expected to add to the nearly 32 million tonnes of already provenreserves of the Ovoid. A new deposit model and reserve calculations are currently in progress and a revised reserve estimate for the Ovoid iscurrently expected to be completed by the end of the first quarter of 1998.Disseminated mineralization, also potentially amenable to open pit mining,with grades between 0.75% and 1.00% nickel over widths of 30 metres has beendiscovered over a distance of 150 metres to the south of the Ovoid towards theSoutheast Extension zone. Other targets near the Ovoid, including the Red Dog,Silver Fox and Makhavinekh grids, continue to be part of the drilling program. A significant geophysical anomaly located some 60 kilometres to the northof Voisey's Bay was discovered during the fourth quarter of 1997. An analysisof the geophysical response to the anomaly indicates that it may be caused bynickel-bearing sulphide minerals. This anomaly will be tested by diamonddrilling later in 1998 when the current relatively harsh winter conditionssubside. Status of Mine and Mill Facilities, Smelter and Refining Facilities andEnvironmental Permitting On December 15, 1997, Voisey's Bay Nickel Company Limited (''VBNCL''), a wholly-owned subsidiary of the Company, submitted the Environmental Impact Statement (''EIS'') for the mine, mill and related facilities andinfrastructure in the Voisey's Bay, Labrador area (the ''Mine/Mill Project'').The EIS was filed with regulatory authorities and with the five personenvironmental assessment panel, the body created by the January 1997memorandum of understanding among the Governments of Canada and the Provinceof Newfoundland, the Labrador Inuit Association (''LIA'') and Innu Nation toconduct the environmental assessment of the Mine/Mill Project. The EISrepresents one of the most comprehensive environmental impact statements everprepared for a mining project in Canada. The timing of the submission of theEIS was consistent with the schedule VBNCL had established after the panel'sdetailed guidelines for the EIS were issued in late June 1997 and marks amajor milestone for the Mine/Mill Project. The EIS is currently being reviewed by the five person panel and has beenreleased for public comment. Following the initial public review, VBNCL maybe required to provide additional information, after which public hearingswill be scheduled. VBNCL currently expects that the environmental review andapproval process for the Mine/Mill Project will be completed in the fourthquarter of 1998 and that shortly thereafter the necessary permits will beissued to begin construction as soon as practical thereafter given theprevailing climate conditions in the area. The September 1997 action filed by a Newfoundland-based organization,whose members include environmental and other groups, in a Canadian federalcourt seeking to require that the environmental review and approval processfor the proposed smelter and refinery facilities in Argentia be joined withthe process governing the Mine/Mill Project is expected to be heard by thatcourt in mid-February 1998. Status of Negotiations with Aboriginal Groups and Governments Throughout a good portion of 1997, VBNCL was engaged in separate Impactand Benefits Agreement (''IBA'') negotiations with both the LIA and Innu Nation. Significant progress was achieved during the last quarter of 1997 and into January 1998 with both groups on a number of issues to be covered byIBAs, with the nature and participation by the aboriginal groups in thefinancial returns from the Voisey's Bay deposit still representing one of thecritical issues to be resolved in these negotiations. VBNCL believes that negotiations on IBAs have been, and will continue tobe, affected by the status of the separate negotiations covering acomprehensive land claims settlement between these aboriginal groups and thefederal and provincial governments. VBNCL understands that significantprogress was made during the fourth quarter of 1997 on land claims with LIAand the Innu Nation also recently restarted its parallel negotiations on landclaims with the federal and provincial governments. VBNCL continues to believethat a resolution of the land claims and related issues between the aboriginalgroups and the federal and provincial governments, as well as agreement on thecritical issues relating to the completion of IBAs, can be reached on a basisthat would not impact the current schedule for construction and start-up ofthe mine and mill facilities at Voisey's Bay. The federal and provincialgovernments and the aboriginal leadership have recognized the interrelatednature of the key financial, tax and other issues required to be resolvedamong the parties on a timely basis in order to enable Voisey's Bay to proceed. The Company is continuing its review of the key financial, technical andother issues facing Voisey's Bay. The completion of this review will be tied to the resolution of a number of issues with the federal and provincial governments which are the subject of confidential discussions with theseparties. The development of the Voisey's Bay project by the Company will bedependant on sound economic considerations and realizing an appropriate returnfor the Company's shareholders relative to other projects, while at the sametime meeting the legitimate requirements of both governments and theaboriginal groups concerned.
FOR: TECK CORPORATIONTSE, ME, VSE SYMBOL: TEK.ATSE, ME, VSE SYMBOL: TEK.B FEBRUARY 4, 1998Teck Reports 1997 Earnings of $50 Million BeforeSignificant Year End Writedowns, Cash Flow in 1997 was$140 MillionVANCOUVER, BRITISH COLUMBIA--With the sharp drop in the price of gold and base metals as well as the Asian currency crises, all of which have had a significant impact on asset values, Teck reviewedthe carrying value of all of its assets and recognized writedowns where appropriate. While these current market conditions may not reflect long-term values, it was felt prudent to take this action.These writedowns, on an after-tax basis, were $52 million on the Tarmoola gold mine in Australia, $22 millon on the VBN shares, a provision of $67 million against undeveloped properties and $34 million against marketable securities. Total after-tax writedowns amounted to $175 million, and in addition Teck's share of writedowns taken by Cominco was $51 million. As a result, Teck reported a loss of $176 million or $1.81 per share in 1997. This compares with earnings of $255 million or $2.65 a share in 1996, which included unusual gains of $191 million on the Diamond Fields transaction net of certain provisions. Excluding the writedowns and the unusual gain in the two years, net earnings were $50 million or $0.51 per share in 1997 compared with $64 million or $0.66 per share in 1996. Cash flow from operations before changes to non-cash working capital items was $140 million or $1.45 per share, compared with $158 million or $1.64 per share in the previous year. In the fourth quarter of 1997, net earnings excluding the writedowns were $3 million or $0.03 per share, compared with $12 million or $0.13 per share in the same period last year. Cash flowin the fourth quarter was $37 million compared with $45 million in1996. Sales revenue totalled $688 million in 1997, slightly lower than the 1996 level of $702 million. Increased gold revenue from the newly acquired Tarmoola mine (Teck - 70 percent) was offset by lower gold prices. Copper revenue was lower than last year due to the closing of the Afton mine in May of 1997. Coal revenue was similar to 1996 levels. Gold production was 374,000 ounces in 1997 compared with 360,000 last year. The 50 percent-owned David Bell and Williams mines at Hemlo accounted for 302,400 ounces or 81 percent of the company's 1997 gold production, while the newly acquired Tarmoola mine contributed 40,000 ounces. Cash operating costs at the Hemlo minesaveraged US$210 per ounce in 1997, compared with US$199 per ounce in 1996. Including gains from forward sales, the company's averagerealized gold price was US$348 per ounce in 1997, significantly lower than the US$394 per ounce last year. The average US/Canadiandollar exchange rate was 1.38, compared with 1.36 for 1996. Gold prices declined in 1997 due to growing concern over selling by central banks and the strength of the US dollar. By the end of 1997, the gold price had fallen to an 18-year low of US$280 per ounce. At December 31, 1997 the company had secured price protection on 285,000 ounces of gold at average prices of US$399 per ounce, of which 215,000 ounces are realizable over the next 24months. The company's copper production in 1997 was 132 million pounds compared with 143 million pounds a year earlier. The reduction wasmainly due to the closing of the Afton mine. The average realized copper price was US$1.03 per pound, the same as in 1996, although by year-end the price had fallen to US$0.78. Metallurgical coal production from the Elkview mine and Teck's 61 percent share of the Bullmoose mine was 3.9 million tonnes, the same as in 1996. The average realized coal price from the two mines was similar to 1996 prices. The company's equity investments contributed a loss of $28 million in 1997 compared with earnings of $14 million in 1996. The 1997 loss included the company's share of the closure costs of Cominco's Glenbrook operations of $41 million and asset writedownsof $10 million. Excluding these unusual items, equity earnings in 1997 were $23 million. During the year, the company completed an agreement with the Sumitomo Group to acquire a 40 percent joint venture interest in the Pogo gold deposit located in Alaska. Teck can earn its interest by incurring expenditures of US$28 million on the project, producing a feasibility study on or before December 31, 2000, and thereafter contributing the first US$33 million of jointventure development and construction costs. Teck will act as operator of the joint venture. Teck spent Cdn$10 million on the 1997 exploration program, which significantly extended the mineralization from that known previously. As of the year-end the geological reserve was estimated at 10.9 million tons grading 0.412 ounces per ton, or 4.5 million ounces of gold. The 1998 program will include infill and step out drilling and the development of underground ramp access to assess geotechnical aspects and alternative mining methods. Late in the year Teck participated in the discovery of a massive sulphide deposit containing values in copper, zinc, gold and silver in Zacatecas Province, Mexico, and a substantial follow-up drilling program is planned for the first half of 1998. At the year-end, working capital was $324 million, including cash and short-term investments totalling $265 million. Marketable investments and long-term receivables, excluding the company's 34 percent holding in Cominco Ltd. and the Inco common shares, had anestimated value of $300 million. Long-term debt, excluding the convertible debentures and debentures exchangeable into Inco common shares, totalled $230 million or 10 percent of total capitalization. While Teck continues to be in a strong financial position, the company has taken steps to reduce discretionary expenditures, including exploration and capital spending, in 1998 in the light of weaker metal prices. |
