Boliden doubles profits in eventful year

While creating a stir in North America with a corporate move to Toronto from Sweden, a public flotation and a successful takeover of Westmin Resources (WMI-T), new-kid-on-the-block Boliden (BOL-T) also managed to double its profits and boost most metal-production levels over the past fiscal year.

Boliden posted net earnings of US$81.8 million (or US82cents per share) for the year ended Dec. 31, 1997, compared with net earnings of US$38.3 million (US38cents per share) in 1996. The gains came despite a slight drop in revenues, which stood at US$1.20 billion for 1997, down US$60.7 million from 1996.

Net earnings for the three months ended Dec. 31, 1997 were US$16.8 million (US17cents per share), up from US$10.8 million (US11cents per share) for the same period in 1996.

Boliden President Anders Bulow said that the improved earnings were due to a stronger U.S. dollar in relation to Swedish, Norwegian and Spanish currencies (the bulk of the company’s operations are in Sweden, Norway and Spain), an improved zinc price and the generally good performances of its operating units.

Boliden’s operating income from mining operations in 1997 was US$84.9 million, compared with US$38.5 million in 1996.

In December, Boliden’s Los Frailes polymetallic mine in Spain reached its designed annual production rate of four million tonnes. The US$167-million project involved mine development as well as mill expansion and modernization. In 1998, Los Frailes is expected to produce 125,000 tonnes of zinc in concentrate, 4,700 tonnes of copper, 48,000 tonnes of lead, and 3 million oz. silver in concentrate.

The company’s four mining areas in Sweden all achieved record production during 1997: Aitik produced more than 250,000 tonnes of concentrates; the Boliden area operations concentrator attained mill throughput of 1.53 million tonnes; Garpenberg attained mill throughput of 898,000 tonnes; and Laisvall produced 1.88 million tonnes of ore. At Garpenberg, the Gruvsjo shaft was opened early in the year, and in the fourth quarter of 1997 mining began on the 900-metre level at Garpenberg Norra, which will bring ore production at Garpenberg to 1 million tonnes in 1998. At Laisvall, development of a recently discovered zinc-rich zone near the existing mine workings began in the fourth quarter.

At Boliden’s 50%-owned Sukhaybarat gold mine in Saudi Arabia — where higher-than-expected grades were being mined — Boliden’s share of gold production was 31,107 oz. gold for 1997.

Overall, Boliden’s 1997 metal production was: 129,761 tonnes of zinc (down from 142,498 tonnes in 1996); 86,041 tonnes of copper (65,669 tonnes); 99,320 tonnes of lead (97,346 tonnes); 164,445 oz. gold (154,995 oz.); and 8.08 million oz. silver (7.7 million oz.).

Production in the fourth quarter of 1997 was: 42,452 tonnes of zinc (up from 34,467 tonnes during the same period last year); 24,781 tonnes of copper (14,907 tonnes); 27,475 tonnes of lead (26,777 tonnes); 41,211 oz. gold (37,146 oz.); and 2.25 million oz. silver (2.1 million oz.).

All three of Boliden’s smelters set production records in 1997: the Ronnskar smelter produced 128,414 tonnes of copper cathode; the Bergsoe secondary lead smelter produced 43,425 tonnes of lead alloys; and Norzink (50%-owned by Boliden) produced 142,249 tonnes of zinc.

Boliden’s capital expenditures rose US$31.3 million during 1997 to US$149.6 million, with most of the expenses divided between the company’s mining (US$112.3 million) and smelting (US$31.6 million) operations.

For the mining operations, the major capital expense in 1997 was the US$46.8 million needed to complete Los Frailes. Another major capital project in 1997 was the development of a haulage drift on the 800-metre level connecting the Petiknas and Renstrom mines, which was completed in the fourth quarter.

At the Ronnskar smelter, two capital projects were completed in the fourth quarter: reconstruction and expansion of the precious-metals recovery plant; and rebuilding of a Kaldo plant to increase scrap-handling capacity. Both projects will further reduce emissions at Ronnskar. A shaft furnace expansion at the Bergsoe secondary lead smelter was also completed in 1997.

Boliden’s exploration efforts in 1997 focused on developing existing assets, with 15 of 24 projects already being at the drilling stage. Deep ore definition projects have begun at five of the Boliden area mines.

At the Renstrom Deep project in the Boliden area, an exploration drift was completed at the 800-metre level to test the deposit to a depth of 1,750 metres. The target is a geological resource of more than two million tonnes grading 12.7% zinc, 4.5 grams per tonne gold, 270 grams per tonne silver, with lead and copper values.

The Einarsson deposit at the Kristineberg mine, also in the Boliden area, has a resource in its core of about 1 million tonnes grading 1.8% copper and 8 grams gold per tonne. A further 1.5 million tonnes is being tested by closely spaced drilling.

In Saudi Arabia, four million tonnes of ore at Sukhaybarat has been upgraded to the proven category, and a feasibility study at the Bulgah deposit is nearing completion.

Boliden’s engineering and consulting subsidiary, Boliden Contech, completed a precious-metals plant for Balkashmys in Kazakstan as well as mercury-removal plants in both China and Germany. Contracts signed in 1997 include the supply of Kaldo technology for treating electronic scrap in Russia and the supply of roasting technology for arsenic-bearing gold concentrate in China.

Regarding the Westmin takeover, Boliden says that by the extended deadline of Feb. 6, it had acquired about 95% percent of all outstanding Westmin shares and that it intends to exercise its right to acquire the remaining shares.