ASARCO reports second quarter results (1 of 2).

NEW YORK--(BUSINESS WIRE)--July 29, 1996--ASARCO Incorporated (NYSE:AR) today reported net earnings of $72.4 million, or $1.70 per common share, for the quarter ended June 30, 1996, compared with net earnings of $56.4 million, or $1.34 per common share, for the second quarter of 1995. Results for the second quarter of 1996 include an after-tax gain of $39.0 million, or $0.92 per share, on the sale of the Company's 15.0% interest in M.I.M. Holdings Limited (MIM), an Australian based mining company.

Sales of products and services were $681.0 million in the second quarter of 1996, compared with $787.5 million in the same period of 1995. The decline in sales is principally a result of lower copper prices.

For the six months ended June 30, 1996, Asarco reported net income of $108.1 million, or $2.53 per share, compared with net income of $122.1 million, or $2.90 per share, for the six months ended June 30, 1995.

Sales of products and services for the first six months of 1996 were $1,399.0 million compared with $1,578.5 million for the same period in 1995.

The average prices for copper were lower in the second quarter of 1996 compared with the same period of 1995. The average price for copper on the New York Commodity Exchange (COMEX) in the second quarter of 1996 was $1.16 per pound compared with $1.33 in the second quarter of 1995. The average London Metal Exchange (LME) copper price was $1.12 compared with $1.31 in the year-earlier period. Approximately 46% of Asarco's consolidated copper sales in the second quarter are based on the COMEX price with the balance based on LME quotations. The average LME price for lead was 37 cents per pound compared with 27 cents in the second quarter of 1995. The average zinc price was 47 cents per pound, which was unchanged from a year ago. The molybdenum price averaged $3.15 per pound in the second quarter of 1996 compared with $7.21 in the year earlier period. The average price for silver was $5.30 per ounce compared with $5.48 in the second quarter of 1995.

Reporting the Company's results, Richard de J. Osborne, Chairman of the Board said, "Asarco's second quarter earnings reflect the decline in copper prices during the first half of 1996. The decline adversely affected the Company's net earnings by approximately $37 million for the second quarter, and approximately $77 million for the first 6 months of 1996 compared with the same periods in 1995. The negative impact on net earnings for the second quarter includes approximately $4.4 million attributable to sales of copper which were provisionally priced at approximately 90 cents per pound. Final pricing for these sales will occur in the third quarter of this year. Results for the second quarter of 1996 also include a reversal of income taxes accrued in prior years of $5.0 million.

"In May, the Company sold its 15.0% interest in MIM for $331.2 million, resulting in a pre-tax gain of $60.1 million and an after-tax gain of $39.0 million. The sale of the Company's interest in MIM provided significant cash to reduce debt and will allow the Company to focus its attention on investments which it operates and manages directly. The sale allowed the Company to take a major step toward achieving its long term goal of reducing its debt to 25% of total capital. At June 30, 1996, Asarco's debt to capital ratio was 28.1% compared with 37.9% at June 30, 1995.

"Asarco's beneficial interest in mined copper production in the second quarter of 1996 grew to 258 million pounds compared with 216 million pounds in the year earlier period representing an increase of 19.4%. For the first 6 months of 1996, beneficial mined copper production increased over 20% from the first half of 1995 to 509.2 million pounds. Year over year increases in production have been achieved at the Company's Ray and Mission mines in Arizona, as well as by Southern Peru Copper Corporation (SPCC), which is 54.1% owned by Asarco.

"The Company's specialty chemicals and aggregates businesses also performed well in the second quarter, contributing $9.3 million in earnings."

The Company has had in place a price protection program consisting of puts and synthetic puts for a portion of its own copper production and the copper production of SPCC. The Company sold a portion of this price protection for a pretax gain of $35.0 million, including the Company s proportionate interest in the gain realized by SPCC. This represents an assured gain of 16.3 cents per pound over the future prevailing price when the underlying production is sold. The Company will recognize $17.2 million of the gain when the production is sold during the second half of 1996 and $17.8 million in 1997. Asarco continues to hold puts on 120.5 million pounds of copper for the second half of 1996 and 42.0 million pounds for the first quarter of 1997, both at an average strike price of $1.00. SPCC continues to hold puts on 87.8 million pounds of copper for the second half of 1997 and 46.5 million pounds for the first quarter of 1997, both at an average strike price of 95 cents.

Discussing the Company's outlook for the balance of 1996, Osborne said, "Despite the recent speculative trading activity in the copper market which has significantly reduced the terminal market prices, the market fundamentals continue to improve. Worldwide consumption of copper has continued to exceed production, and inventories in terminal market warehouses have declined substantially from year-end 1995 levels. In our judgment, once the uncertainty resulting from the recent speculative trading activity abates, the underlying favorable supply and demand fundamentals will be reflected in the copper market."

ASARCO Incorporated is one of the world's leading integrated producers of nonferrous metals, principally copper, lead, zinc, silver, and molybdenum. Asarco also produces specialty chemicals and aggregates. Asarco had sales of $3.2 billion in 1995.

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CONTACT: ASARCO Incorporated

Jerry Cooper, Corporate Communications, 212/510-1810