Robust Falco weathers labor storm in Sudbury

Despite labor unrest at its Sudbury division, Falconbridge (FL-T) managed to post some hefty profits in the third quarter, while advancing several projects.

The base metal titan earned $23.5 million (or 13 cents per share) on revenue of $519.1 million for the 3-month period, compared with $88.7 million (50 cents per share) on $496.1 million in the corresponding period last year.

Earnings for the first nine months of 1997 amounted to $129.9 million (72 cents per share) on $1.59 billion, compared with $220.1 million ($1.24 per share) on $1.64 billion in the similar period of 1996.

Operating income during the first nine months of 1997 was $231.9 million — down $43.6 million from the corresponding period of 1996.

The 24-day strike that occurred early in the third quarter in Sudbury, Ont., resulted in an expense of $18 million.

The balance sheet was weakened by the inclusion in last year’s third-quarter results of $58.6 million, gained from a settlement over the failed attempt to take over Diamond Fields Resources and from transactions relating to the Collahuasi copper project in Chile, in which the company owns a 44% interest.

For the recent quarter, the company realized average prices for nickel, copper, zinc and silver of $3.18, $1.04 and 78 cents per lb. and $4.55 per oz., respectively. For the 9-month period, those metals were sold at an average price of $3.38, $1.11 and 67 cents per lb. and $4.76 per oz., respectively.

Combined production in the recent quarter from operations at Sudbury and Timmins was 5,965 tonnes of nickel, 22,161 tonnes of copper, 28,569 tonnes of zinc and 858,000 oz. of silver. Production of those metals for the first nine months of 1997 was 29,762, 88,479, and 76,810 tonnes and 2.5 million oz., respectively.

Figures for nickel include production from custom feed.

Falco refined 13,175 tonnes of nickel and 9,110 tonnes of copper at its Nikkelverk refinery in Norway. Figures for the 9-month period are 46,749 tonnes for nickel and 23,693 tonnes for copper.

At the Kidd Creek division in Timmins, Ont., 31,948 tonnes of zinc and 29,726 tonnes of copper were refined. Production of blister copper was 34,569 tonnes. For the 9-month period, 89,787 tonnes of refined zinc and 81,605 tonnes of refined copper were produced, whereas production of blister copper totalled 83,283 tonnes.

The company’s share of ferronickel production from its 85.26%-owned Falcondo project in the Dominican Republic was 7,396 tonnes in the third quarter and 23,990 tonnes during the first nine months of 1997. Earnings from the operation in the recent quarter were essentially unchanged from the corresponding period in 1996 — $10.5 million.

In 1998, Falco expects to increase its output of refined nickel by 50% with the startup, in December, of its Raglan mine in northern Quebec. The operation will add a further 20,000 tonnes to the company’s yearly nickel production, which is expected to increase by a further 10,000 tonnes per year.

At last report, Raglan hosted proven and probable reserves of 14.43 million tonnes grading 3.17% nickel and 0.88% copper, as well as possible reserves of 6.14 million tonnes grading 2.97% nickel and 0.88% copper. Exploration drilling this year added 1.5 million tonnes to the project’s previous resource of 1.4 million tonnes grading 2.41% nickel and 0.73% copper.

By year-end, Falco expects to complete a feasibility study on the Konkola Deep copper deposit in Zambia and a prefeasibility study on mining between the 6800 and 8200 levels at Kidd Creek. The former project is held in joint venture with a subsidiary of South African-based Anglo American.

Also in the making is a feasibility study on the joint-ventured Gope diamond project in Botswana, ownership of which is split equally between Falco and De Beers Consolidated Mines of South Africa.