Speculation on Metall’s future continues

There is persistent speculation that Metallgesellschaft (MG) plans to sell its 50.1% interest in Metall Mining (TSE). In recent news reports, MG is said to have confirmed the sale of the Canadian subsidiary as part of a package of measures designed to help the company recover from losses incurred last year.

Douglas Scharf, Metall’s chief financial officer, neither confirmed nor denied these reports. “MG is in the process of developing a new strategy by deciding which of its assets are non-core assets,” he told The Northern Miner. “We know there have been press reports suggesting we might be for sale. However, we have not heard anything official.”

This speculation follows the release of mixed fourth-quarter and year-end results for the Canadian company. Lower realized copper and zinc prices, coupled with higher treatment charges for concentrates at the Winston Lake mine near Thunder Bay, Ont., took their toll on revenues and earnings. Despite these problems, revenues managed to increase to $140.3 million in the fourth quarter of 1993 from $104.3 million in the same period in 1992. On a year-end basis, revenues were $326.8 million, compared with $312.7 million at the end of 1992.

The gain in revenues was largely due to the acquisition of a 35% interest in Norddeutsche Affinerie AG in Sept. 30, 1993.

Metall had earnings in 1993 of $1.3 million compared with earnings of $22.2 million in 1992.

At the Copper Range operations in Michigan, revenues and earnings were negatively affected by a decline in the average realized copper price to US90cents from US$1.03 per lb. in 1992 — this despite the fact that cash operating costs dropped to US79cents from US82cents per lb.

At Winston Lake, lower zinc prices and higher treatment charges for concentrates also contributeed to lower earnings.

Other corporate developments include Metall’s increasing its indirect ownership in Ok Tedi Mining to 20% from 7.5%, as well as increasing its preference share interest to 17.4% from 8.7%

In Canada, Metall has decided to postpone indefinitely development of the Izok Lake project, 360 km north of Yellowknife, N.W.T. The company is completing a $1.5-million pre-feasibility study of what it refers to as “the largest undeveloped zinc-copper deposit in North America.”

Izok Lake contains a possible and probable geological resource of 13.6 million tonnes averaging 14% zinc, 2.5% copper, 1.6% lead, 0.1 grams gold and 77.7 grams silver.

The project also contains the Inukshuk massive sulphide deposit, 400 metres east of the lake. This deposit contains a mineral inventory of 2 million tonnes averaging 8% zinc and 2% copper.

Metall is confident the mine will eventually be developed, although progress has thus far been impeded by the high cost of transporting concentrates from such a remote location.

On a positive note, the company is proceeding with construction at its 45%-owned Bougrine zinc-lead property in Tunisia. Annual output of 70,000 tonnes zinc and 14,000 tonnes lead concentrates should start in the second quarter of 1994 and last about 15 years.

The 49%-owned Cayeli copper-zinc deposit is also expected to come on stream later in the year. About 110,000 tonnes copper and 70,000 tonnes zinc concentrates will be produced annually.

Meanwhile, feasibility studies are nearing completion at the Troilus gold project in Quebec and the Pend Oreille zinc-lead play in Washington state.