Boliden Limited Reports Third Quarter Earnings -- All dollar amounts are in United States dollars Part 1 of 2.TORONTO--(BUSINESS WIRE)--Oct. 29, 1997--Boliden Limited (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). , ME BOL BOL Bolivia (ISO Country code) BOL Books Online BOL Bole (SIL code, Nigeria) BOL Bill Of Lading BOL Beginning Of Line BOL Best Of Luck BOL Buzz Out Loud BOL Bruin Online BOL Beginning Of Life .IR.) Highlights - Third-quarter net earnings were $27.2 million compared with $3.2 million for the same period in 1996. Nine-month earnings were $65.1 million compared with $27.7 million during the same period in 1996. -The Los Frailes zinc mine and concentrator in Spain reaches an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. production rate of two million tonnes per year, as scheduled. The full production rate of four million tonnes per year is expected to be reached in the fourth quarter. - Saudi Company for Precious Metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. (SCPM SCPM Supply Chain Process Management SCPM Supply Chain Performance Management SCPM Stanford Certified Project Manager (Stanford Advanced Project Management) SCPM Smart Card Personalization Manager SCPM Stars Composite Process Model ) receives a favourable feasibility study The analysis of a problem to determine if it can be solved effectively. The operational (will it work?), economical (costs and benefits) and technical (can it be built?) aspects are part of the study. Results of the study determine whether the solution should be implemented. and proceeds with a pushback push·back n. 1. A device or mechanism that affords movement of another object backwards: the pushback on a subway door. 2. Forced movement of troops back from the line. on the 150-metre level at the Sukhaybarat gold mine in Saudi Arabia Saudi Arabia (sä  `dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. .- The Smelting smelting, in metallurgy, any process of melting or fusion, especially to extract a metal from its ore. Smelting processes vary in detail depending on the nature of the ore and the metal involved, but they are typified in the use of the blast furnace. and Refining business area reports strong operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before due to favourable metal prices and higher production. - Exploration drilling at the Renstrom Deep project intersects 19.9 percent zinc, 0.3 percent copper, 3.9 percent lead, 2.4 grams per tonne gold, and 244 grams per tonne silver over a core length of seven metres. Boliden Limited recorded net earnings of $27.2 million or $0.27 per share for the three months ended September 30, 1997, compared with net earnings of $3.2 million or $0.03 per share for the same period in 1996. Net earnings for the nine months ended September 30, 1997, were $65.1 million or $0.65 per share, compared with $27.7 million or $0.28 per share for the same period in 1996. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased to $35.6 million in the third quarter and $88.9 million in the first nine months of 1997, compared with $6.8 million and $51.6 million in 1996. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses (net earnings after adjusting for items not affecting cash) in the third quarter of 1997 was $54.6 million or $0.55 per share, compared with $23.8 million or $0.24 per share for the third quarter of 1996. Cash flow in the first nine months of 1997 was $134.7 million or $1.35 per share, compared with $88.9 million or $0.89 per share for the first nine months of 1996. METAL PRICES AND CURRENCIES Higher zinc and copper prices contributed to improved earnings in both the third quarter and the first nine months of 1997 compared to the same periods a year earlier. Most of the company's costs are in Swedish, Spanish and Norwegian currencies and favourable exchange rates for those currencies in relation to the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. dollar reduced the company's costs compared to year-earlier periods. -0-
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Average LME/LBM Three months ended Nine months ended
Prices (USD) September 30, September 30,
1997 1996 1997 1996
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Zinc USD/lb 0.73 0.45 0.66 0.46
Copper USD/lb 1.03 0.90 1.08 1.01
Lead USD/lb 0.28 0.36 0.28 0.37
Gold USD/oz 323 385 333 387
Silver USD/oz 4.53 5.08 4.65 5.19
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Exchange Rates Three months ended Nine months ended
Average Rates September 30, September 30,
1997 1996 1997 1996
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SEK/USD 7.83 6.63 7.64 6.71
NOK/USD 7.46 6.44 7.05 6.46
ESP/USD 152 127 146 126
CAD/USD 1.38 1.37 1.38 1.37
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OPERATIONS Mining Operating income from mining operations in the third quarter was $25.9 million, compared with $2.0 million a year earlier. At Boliden Apirsa SL in Spain, zinc production increased as the concentrator continued to approach full production levels. In September, the mill treated pre-production ore from the Los Frailes mine at an annualized rate of two million tonnes per year. Total zinc contained in concentrate at Apirsa in the third quarter of 1997 was less than in the third quarter of 1996, the last quarter of production at the now-closed Aznalcollar. The Los Frailes mine is expected to reach commercial production, and its designed production rate of four million tonnes per year in the fourth quarter of 1997. At the Sukhaybarat gold mine in Saudi Arabia, 50 percent owned by Boliden, a feasibility study "A Feasibility Study" is an episode of the original The Outer Limits television show. It first aired on 13 April, 1964, during the first season. It was remade in 1997 as part of the revived The Outer Limits series with a minor title change. for a pushback on the 150-metre level, moving approximately four million tonnes of inferred reserves into the proven ore reserve category, was completed and work on the pushback began. At Swedish mining operations, higher than average ore grades Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly at Aitik resulted in increased contained copper in concentrate compared to a year earlier, and reduced unit costs contributed to improved operating income. Aitik also established a monthly production record of 23,625 tonnes of concentrate in August. At Boliden-area operations, copper and gold content in concentrate was higher than in the third quarter of 1996 while zinc in concentrate was lower. Production of lead in concentrate at Laisvall and of zinc in concentrate at Garpenberg increased due to higher production volume. Development work at Garpenberg, which will continue into 1998 in order to increase annual production rates to approximately 1.1 million tonnes, resulted in a higher than average waste-to-ore ratio. Subsequent to the end of the third quarter, on October 10, 1997, a rock burst at the Petiknas mine, one of the six Boliden-area mines, resulted in a fatality fa·tal·i·ty n. 1. A death resulting from an accident or disaster. 2. One that is killed as a result of such an occurrence. . Operations at this mine were temporarily curtailed in October as a result. -0-
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Contained Primary Three months ended Nine months ended
Metal Production September 30, September 30,
1997 1996 1997 1996
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Zinc (tonnes) 27,546 32,099 87,309 108,031
Copper (tonnes) 22,042 15,585 61,260 50,762
Lead (tonnes) 22,311 21,474 71,845 70,569
Gold (ounces) 42,536 39,288 123,234 117,849
SCPM 50 percent
including
Silver (000's ounces) 1,714 1,814 5,830 5,604
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Smelting and Refining Operating income from smelting and refining operations in the third quarter was $12.7 million compared with $5.3 million a year earlier. All facilities at the Ronnskar metallurgical met·al·lur·gy n. 1. The science that deals with procedures used in extracting metals from their ores, purifying and alloying metals, and creating useful objects from metals. 2. plant performed well including the copper smelter and refinery, the lead smelter and refinery, the slag fuming fuming /fum·ing/ (fum´ing) emitting a visible vapor. fum·ing adj. Producing or emitting smoke or vapor, as for certain concentrated nitric, sulfuric, and hydrochloric acids. plant and the nickel sulphate sulphate: see sulfate. plant. Results include a provision for the final stages of a two-year outsourcing program that began in 1996. Plans are also being made for a scheduled two-week maintenance shut-down of the smelter in May, 1998. At Norzink, higher production, favourable zinc prices, and the results of a cost-reduction program that was completed in the first quarter of 1997 all contributed to improved earnings compared to a year earlier. As a result of a tax ruling related to a transaction in a previous year, the company included in the third quarter of 1997 an additional tax accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. that increased income tax expense for the quarter. At Bergsoe, a rebuilt furnace was commissioned increasing installed capacity by 25 percent to 50,000 tonnes of lead a year. Fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. and Recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. Operating income from fabricating and recycling operations in the third quarter was $620,000 compared with $2.5 million a year earlier. Price declines that have hurt the copper tube and brass divisions since the first quarter of 1997 seem to have come to an end. Demand increased during the quarter as economic activity in Europe improved. This increased activity, particularly in Germany, is expected to result in stronger prices in the fourth and subsequent quarters. The recycling division has benefited from metal price volatility. Technology Operating income from Boliden Contech in the third quarter remained stable. Boliden Contech provides design and process engineering, procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. , and project management services to mining and mineral processing mineral processing or ore dressing Mechanical treatment of crude ores to separate the valuable minerals. Mineral processing was at first applied only to ores of precious metals but later came to be used to recover other metals and nonmetallic minerals. companies around the world. Its current projects include a precious metals recovery plant using Boliden technology being commissioned in Kazahkstan and India's first secondary copper smelter which uses Kaldo smelting technology supplied by Boliden. CAPITAL EXPENDITURES Capital expenditures during the third quarter and first nine months of 1997 were $40.9 million and $104.8 million, compared with $20.6 million and $67.1 million for the same periods in 1996. The company spent $10.0 million in the third quarter at Los Frailes on mine development and mill expansion. Other significant projects included development of a haulage ramp connecting the Petiknas and Renstrom mines (two Boliden-area mines) and a precious metals recovery plant at the Ronnskar smelter, both of which are expected to be completed in the fourth quarter of 1997. TREASURY ACTIVITIES As of September 30, 1997, the company had reduced the impact of fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. foreign exchange rates with a hedging program covering more than two years. A combination of options and forward contracts has been used to hedge costs in Swedish, Norwegian and Spanish currencies against the United States dollar at minimum rates of 7.40, 6.84, and 138 respectively. Maximum average rates for the option program are 7.95, 6.84, and 149 respectively. As of September 30, 1997, the company had sold forward between one and three months of gold and lead production at prices above the September 30, 1997, market prices. Other metals were essentially unhedged. EXPLORATION AND BUSINESS DEVELOPMENT The company's $25 million exploration program in 1997 involves 24 exploration programs in six countries including 15 projects at the drilling stage. Highlights from the third quarter include the following: At the Renstrom Deep project in Sweden, where previous drilling indicated approximately two million tonnes of mineral resources Noun 1. mineral resources - natural resources in the form of minerals natural resource, natural resources - resources (actual and potential) supplied by nature grading 12.7 percent zinc, 4.5 grams gold per tonne, 270 grams silver per tonne, plus lead and copper values, further drilling from an exploration drift on the 800-metre level intersected mineralization Mineralization The process by which the body uses minerals to build bone structure. Mentioned in: Rickets mineralization, n the bioprecipitation of an inorganic substance. with one intersection returning values of 19.9 percent zinc, 0.3 percent copper, 3.9 percent lead, 2.4 grams per tonne gold, and 244 grams per tonne silver over a core length of seven metres. The $2.6-million drill program is continuing. Current data indicates the Einarsson zone near the Kristineberg polymetallic mine in the Skelleftea region of Sweden contains a minimum of 2.5 million tonnes of gold-copper mineralization, including a well-defined core of 500,000 tonnes grading 8 grams per tonne gold, 9 grams per tonne silver and 1.5 percent copper and is open along strike in both directions. Three other zones near the mine are also under investigation. Surface drilling resulted in the discovery of the zinc-rich Nadok zone 100 metres from the Laisvall lead mine's underground workings. Intersections from 10 drill holes have outlined an indicated resource of 691,000 tonnes grading 4.04 percent zinc, 2.15 percent lead and 10 grams silver per tonne. A drift will be driven to access the zone and mining is scheduled to begin in the first half of 1998. A strong gold-copper geochemical anomaly from bedrock sampling was defined within one kilometre of the Aitik copper mine in the Norrbotten District of Sweden. The anomaly, parallel to the Aitik mineralization, extends for four kilometres and is up to one kilometre wide. Follow-up drilling is planned. Drilling to test the depth extension of the Los Frailes orebody in Spain intersected a horizon grading 6.1 percent zinc, 3.5 percent lead and 104 grams silver per tonne at a depth of 500 metres, thus confirming higher grade mineralization at depth. On the Salome concession adjacent to the Los Frailes mine, two discrete gravity anomalies A gravity anomaly is the difference between the observed gravity and a value predicted from a model. Geodesy and geophysics In geodesy and geophysics, the usual model is the surface of a global spheroid (ellipsoid of Hayford or WGS84) by rather simple formulae (2 functions of were detected and will be investigated. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge FOLLOW CONTACT: Boliden Limited Anders Bulow, 416/364-2727 or James Borland, 416/216-2272 |
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