Teck’s 1988 net earnings set record in 75 years of mining

But because 1988 represented its 75th continuous year in mining, the report also contains an absorbing historical review, right down to a reproduction of the original 1913 annual report of its famous predecessor company, Teck-Hughes Gold Mines.

The story in simple terms is one of the right people seizing the right opportunity at the right time — and in most cases at a better-than-right price.

Two impressive examples in this decade are the 1981 decision to acquire a sizeable stake in a gold discovery at Hemlo, Ont., and the corporate takeover of mining giant Cominco Ltd. (TSE) in 1987.

Although the David Bell Mine at Hemlo was Teck’s biggest operating income source last year — generating a mine operating profit of some $39 million — Cominco was no slouch either. Cominco contributed $32 million or 37% of Teck’s earnings in calendar 1988. (In 1988, Teck changed from a fiscal year ending Sept 30, to a calendar year ending Dec 31.)

These and other operations generated record ordinary earnings of $88 million ($1.10 per share) in 1988, up from $34 million in the previous year. Record cash flow was $97 million, up from $79 million the previous year.

Teck’s 50%-owned David Bell Mine produced 218,333 oz of gold in 1988, up significantly from the 130,122 oz produced in fiscal 1987. The company also received 25% of the operating profits ($5 million) from production of 67,499 oz on the quarter claim being mined by Hemlo Gold Mines.

If two previous judgments in their favor are upheld by the Supreme Court of Canada, Teck and partner Corona Corp. (TSE) will each have a 50% interest in the Williams gold mine adjoining their David Bell mine at Hemlo. The Williams mine produced 378,943 oz of gold in 1988.

Teck recently increased its holding (to about 38.8%) in Golden Knight Resources (TSE), a new gold producer in the Casa Berardi area of Quebec with a second mine in the wings.

On the base metal side, Teck will be placing the Ajax copper-gold deposit into production, using its nearby Afton mill and thereby extending the life of that British Columbia operation by about eight years.

By transferring the Highmont mill to the large Highland Valley Copper mine in British Columbia, Teck acquired an initial 2.5% interest in the mine, while a reorganization of Lornex Mining resulted in Teck holding a direct 14% interest in the Highland Valley partnership.

Teck’s long term exposure to base metals will be assured by its holding in Cominco (net 20% at year-end) which is developing the Red Dog zinc mine in Alaska and the Hellyer zinc mine in Australia. In the annual report, President Norman Keevil Jr., noted that Teck intends “to continue increasing this position over time”.

Keevil also reported that operations at Bullmoose coal, Niobec niobium, Klondike gold and Beaverdell silver proceeded normally, although the Newfoundland zinc mine is near the end of its reserve life. Teck reported an operating profit of $6.8 million from its oil and gas ventures.

Now international in scope, Teck has associations with Metallgesellschaft AG of West Germany and MIM Holdings of Australia, both of which are shareholders in, and joint venture partners with, the company.

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