Base metal prices put Cominco back in black

Several positive factors — improved sales and production volumes, higher base metal prices and a favorable exchange rate — helped Cominco (TSE) report net income of $132.1 million for 1994, compared with a loss of $113.2 million in the previous year.

Some of the turnaround is attributable to an extraordinary after-tax gain of $78 million in 1994 (on the sale of power expansion rights and the divestiture of Cominco Fertilizers).

Metal prices averaged US45 cents per lb. for zinc, US25 cents per lb. for lead and US$1.05 per lb. for copper, which are 4%, 35% and 20% higher, respectively, than average prices in 1993 on the London Metal Exchange. Refined zinc production volumes increased 15% to 250,900 tonnes, while sales volumes jumped 18% to 255,800 tonnes. The increase is partly a reflection of two factors, the April, 1993, closure of the Trail smelter and increased operating efficiencies.

Increased production from the Red Dog mine in Alaska and the Polaris mine in the Northwest Territories boosted zinc concentrate volumes by 20% to 901,000 tonnes. Modifications to the Red Dog mill resulted in a 26% increase in zinc concentrate production to 533,500 tonnes, and a 23% increase in lead production to 54,200 tonnes.

Cominco’s half interest in the Highland Valley copper mine in British Columbia provided $81 million in operating income for 1994. That figure is $77.4 million higher than in 1993, reflecting higher copper and molybdenum prices, a weaker dollar and operating improvements at the mine. Teck (TSE), which directly and indirectly holds a 36.35% interest in Cominco, also reported improved earnings. The company earned $69 million in the year, compared with $29 million in 1993. Its equity interest in Cominco provided $14 million in earnings.

Teck’s mine operating profit before depreciation was $185 million, up from $160 million

in the previous year. The increase is attributed to higher copper prices and increased coal production.