Breakwater turns a small profit

Zinc miner Breakwater Resources (BWR-T) finished off the last three months of 2003 with net earnings of $327,000, thanks mostly to foreign-exchange gains.

The earnings translate to nil per share, and compare with a year-ago loss of $2 million (or 1 per share). Still, revenue between the two periods was more than halved to $51.4 million, due mainly to the closure of the Nanisivik mine on Baffin Island at the end of the third quarter of 2002, and the effect of the stronger Canadian dollar.

Breakwater also said that revenues were hurt by the timing of the shipments from otherMines, a $1.1-million charge for metal hedge settlements and the mark to market liability inherent in these instruments.

Operating cash flow (before changes in non-cash working capital) more than tripled to $10.4 million.

For all of 2003, Breakwater’s net earnings came to $7.1 million (3 per share) on revenue of $207.6 million, compared with a net loss of $19.9 million (12 a share) on $305.4 million a year earlier. Cash flow from operations was $14.7 million, up from $8.6 million in 2002.

For all of 2003, zinc-in-concentrate production slipped by nearly 24% to 165,422 tonnes, owing to the closure of the Nanisivik mine. Breakwater’s copper production fell almost 40% to 3,710 tonnes, silver output dropped by 25% to 2.2 million oz. Conversely, gold production grew by 1,416 oz. to 26,220 oz. and lead production was up by 823 tonnes at 13,516 tonnes.

Total cash costs were unchanged at US32 per lb. of zinc, while mine site operating costs climbed US$1.13 to US$28.31 per tonne milled.

Breakwater says that while the average realized U.S.-dollar price of zinc climbed by US$84 to US$859 per tonne between the two fourth quarters, the Canadian-dollar price fell by $15 to $1,202 per tonne.

At the end of 2003, Breakwater had $6.4 million in cash and equivalents, unchanged form the end of 2002. Total debt was down to $25.8 million versus $78.7 million at the end of 2002.


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