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CYPRUS MINERALS REPORTS SECOND QUARTER EARNINGS OF $82 MILLION

    DENVER, July 27 /PRNewswire/ -- Cyprus Minerals Co. (NYSE: CYM) today reported 1993 second quarter earnings of $82.0 million, or $1.73 per share, on revenue of $454 million, compared with a 1992 loss of $293.6 million, or $7.60 per share, on revenue of $404 million. Second quarter 1993 results included revenue and an after tax gain of $59.0 million, or $1.24 per share, from the sale of the remaining portion of Cyprus' LTV bankruptcy claims.
    Excluding the LTV gain, second quarter earnings were $23.0 million, or 49 cents per share, compared with 1992 second quarter earnings, excluding write-downs, of $21.4 million, or 45 cents per share.
    For the first six months, Cyprus earned $93.6 million, or $1.98 per share, which included $75.0 million from the sale of the LTV claims, compared with a 1992 loss of $387.6 million, or $10.11 per share.  Excluding the 1993 LTV gain and 1992 write-downs, the cumulative effect of accounting changes, and reorganization charges, 1993 six month earnings were $18.6 million, or 39 cents per share, compared with 1992 earnings of $34.2 million, or 69 cents per share.  The 1993 earnings included a $19 million after tax cost of record heavy rains and flooding at Cyprus' Arizona copper operations.
    Milton H. Ward, Cyprus Minerals' chairman, president and chief executive officer, said, "The sale of our LTV claims and the proceeds from the sale of our short-lived South Pacific gold operations contributed nearly $170 million in cash during the second quarter and bolstered our balance sheet, as we to continue to pursue a number of exciting growth opportunities.  In addition, we reported good second quarter earnings as Coal results improved and Lithium earnings remained strong.  Our cost cutting measures in Copper are progressing, and operations are recovering as planned from the first quarter's record rains.  Although copper prices are now lower than earlier in the year, copper earnings included benefits of our price protection program.  We continue to be optimistic that copper prices will recover as the world economy regains momentum."
    Ward continued, "These are very exciting times at Cyprus.  We are in the midst of the planned merger with Amax Inc., which will create a leading, world-class mining company when completed.  We are working to create an efficient and nimble organization able to take advantage of worldwide mineral opportunities.
    "Growth in our core businesses continues with coal acquisitions in Australia and Pennsylvania that will add about 8 million tons annually to Cyprus' production.  In addition, we have made excellent progress on several gold ventures, including winning a tender to develop a large gold mine in Russia, signing a joint venture agreement to explore a promising mineralized area in Greenland, and pursuing advanced exploration projects at Cerro Quema in Panama and at Brocks Creek in Australia.  We also have a highly prospective property under evaluation in the Far East," Ward concluded.
    Segment income is earnings before corporate overhead, interest, equity and other, and income taxes.  Segment income as discussed below excludes the 1993 LTV gain and the 1992 write-downs and reorganization charges.
    Copper earned $10.5 million during the second quarter, compared with $31.6 million in the 1992 period.  Earnings were lower primarily due to lower copper prices and higher smelting and roasting costs. Realizations averaged 93 cents per pound for the quarter compared with $1.03 during the second quarter of 1992.  The 93 cent realizations included the recognition of $13.1 million, or 8 cents per pound, from Cyprus' second quarter monthly puts and a pro rata portion of Cyprus' annual puts.  Comex prices averaged 83 cents per pound for the quarter.
    The impact of lower copper prices will continue to be mitigated in 1993 by Cyprus' copper put options, ensuring a minimum average realization of about 94 cents per pound, on a London Metal Exchange (LME) basis, on about 90 percent of Cyprus' 1993 produced copper sales. The remaining 1993 options consist of annual puts based on average 1993 copper prices covering 373 million pounds and monthly puts on about 149 million pounds, based on monthly average prices from July through December.  In addition, Cyprus has entered into monthly price protection arrangements which will ensure a minimum realization of 92 cents per pound (LME basis) on 150 million pounds or about 90 percent of projected first quarter 1994 copper sales.
    Net cash costs for copper were 77 cents per pound, 6 cents higher than the 71 cents per pound in the 1992 second quarter essentially due to higher smelting and roasting costs.  In spite of a 6 percent reduction in copper production, the residual weather related problems, and increased stripping requirements at all mines, cost reduction efforts maintained mine site unit cash costs, excluding the cost of smelting and by-product credits, at 1992 levels.  Excluding the effects of the rain, copper operations reduced total cash costs by about 10 percent compared with the first half of 1992 by reducing the labor force and realizing initial benefits of new mine equipment at all mines. In addition, the Sierrita mine reduced its work force in July by 220 employees or nearly 25 percent by adopting a more innovative employee partnership approach.  This action should result in future cost savings of about $8.0 million annually.
    In the second quarter, smelting and roasting costs were temporarily higher due to a continuation of the Miami smelter start-up process and annual maintenance shutdowns at Miami and roasting operations at Casa Grande, Ariz.  In late May, the recently modernized and expanded Miami smelter was shut down for planned annual maintenance and corrective modifications to improve throughput.  Work completed included maintenance in the acid plant, rebricking of the ISA vessel, and water cooling and other modifications to improve throughput and efficiency. The Isasmelt process is working effectively, and since re-start, overall smelter performance has improved significantly.  While progress is being made toward consistent operation at design capacity, the process is taking longer than originally anticipated.
    Copper production totaled 154 million pounds for the quarter compared with 164 million pounds for the 1992 quarter.  Lower 1993 production resulted from residual rain related effects at all locations, primarily Miami, and throughput restraints at Bagdad during tie in of certain mill expansion equipment, which was completed in July.  Ore grade improvement at Bagdad was offset by decreased mill recovery associated with an unrecoverable portion of the sulfide ore in the upper benches of the mining area.  Expansions of the Bagdad and the Sierrita mills by 10 percent each are proceeding ahead of schedule, and a 25 percent expansion of Bagdad SX-EW capacity is beginning to produce additional copper cathodes.
    During the quarter, Cyprus sold 143 million pounds of produced copper, 13 million pounds more than the 1992 second quarter, which was adversely affected by the Miami smelter shutdown for the modernization and expansion project.
    For the first six months, Copper's earnings were $4.2 million compared with $45.0 million in 1992.  The lower earnings were primarily the result of the $25 million pretax financial impact of the record Arizona rainfall in late 1992 and early 1993 and 6 cent per pound lower copper prices.
    Coal reported earnings of $13.0 million for the second quarter, excluding the LTV Claim, $0.6 million more than 1992's second quarter. Improved earnings resulted from nearly 20 percent higher sales and 57 cents per ton lower average unit costs, which more than offset lower realizations.  The decline in realizations resulted from lower spot market prices which declined about 10 percent in the West.  Coal spot markets, especially in the East, have recently firmed mostly due to selective strikes and the extremely hot weather.  As a result, Cyprus is nearly sold out for the remainder of 1993.  In addition, Cyprus has received commitments for additional sales for 1994 because of the current improved demand.
    Higher earnings in the East at Kentucky and Emerald in Pennsylvania were partially offset by lower earnings in the West.  Kentucky's earnings increased because of improved productivities and higher sales volumes resulting in lower unit costs.  At Emerald earnings improved because of higher realizations due to a higher ratio of contract to spot market sales.  In the West, Twentymile's earnings were lower as higher shipments were more than offset by lower realizations and reduced production to lower inventories.
    During the quarter, Cyprus successfully completed its offer for the shares of McIlwraith McEacharn Ltd., of Sydney, Australia, which provides Cyprus with 40 percent of Oakbridge Ltd., of Australia, a coal company currently producing 11 million tons of coal annually.  Earnings from the 40 percent interest in Oakbridge will be reported in the Equity Investments and Other section of the Income Statement.  In addition, Cyprus purchased U. S. Steel Mining Co. Inc.'s Cumberland mine in Pennsylvania.  By combining Cumberland's existing facilities with Cyprus' adjacent coal reserves near its Emerald mine, Cyprus expects to achieve more than 20 years of minable coal reserves at current production levels of about 4 million tons annually.
    For the first six months, Coal earned $19.2 million, $2.9 million greater than the first half of 1992 primarily as the result of higher shipments.
    Other Minerals, which includes lithium, gold, iron ore and exploration, had combined earnings for the second quarter of 1993 of $4.6 million compared with a 1992 second quarter loss of $1.4 million. Iron ore earnings of $2.7 million were $4.1 million better than second quarter 1992 due to a near doubling of sales which allows the facility to operate two furnaces rather than one and achieve lower unit costs. Lithium's earnings of $6.0 million increased $1.3 million compared with the like period in 1992, reflecting lower unit costs which resulted from higher lithium carbonate production volumes in the United States coupled with reduced raw material costs in both the United States and Chile. Cyprus' gold interests in the Selwyn mine in Australia and the Golden Cross mine in New Zealand were sold early in the quarter, resulting in a small combined pretax loss which was more than offset by earnings from inventory liquidations.  On an after tax basis, the transactions had a combined profit of $5.4 million.  The Copperstone gold mine in Arizona was shut down due to the exhaustion of ore reserves.
    Second quarter exploration expenditures were $5.6 million, with nearly equal expenditures for copper and gold projects, and were slightly higher than
the like period in 1992.   During the second quarter, Cyprus announced that it had signed joint venture agreements with a Danish company to explore for and possibly develop gold deposits on exploration concessions in southern Greenland.  Cyprus can earn a 62.5 percent interest in the venture.  In addition, a joint venture formed by Cyprus with five Russian partners won its tender to develop a gold mine from a deposit in the Magadan region of far eastern Russia. After licenses and certain financial terms are approved, construction of a mine is anticipated that could produce up to 340,000 ounces annually.
    Year-to-date earnings for Other Minerals were $12.3 million or $5.7 million greater than the first six months of 1992 due to higher lithium, iron ore and gold earnings partially offset by higher exploration spending.
    Corporate expenses for the second quarter 1993 were $2.5 million or $8.4 million lower, and for the first half of 1993 were $10.9 million or $6.7 million lower than the like periods in 1992.  Changes in stock appreciation rights (SARs) expense accounted for $7.2 million of the quarter to quarter change.  The 1992 periods included charges for SARs reflecting Cyprus' higher stock price, while the 1993 periods include credits reflecting a lower stock price.
    Interest, Equity and Other expense was $2.1 million compared with $5.1 million in 1992.  The lower expense reflects the favorable settlement of certain litigation and the absence of 1992 losses for a Mexican zinc project, partially offset by higher net interest expense primarily associated with the $150 million 8 3/8 percent 30-year Debentures issued in February.  Year-to-date interest, equity and other expense of $7.1 million was slightly lower than in 1992 mostly due to the litigation settlement offset by higher net interest expense.
    Cyprus continues to maintain a strong financial condition with long-term debt as a percent of total capitalization of 27.8, a ratio of current assets to current liabilities of 2.7 to 1.0, and a cash balance of $143 million at June 30.  Cyprus paid a regular quarterly dividend of 20 cents per share during the quarter.
    Cyprus Minerals, headquartered in Englewood, Colo., is a major producer of copper, coal and lithium.  Cyprus also produces molybdenum and iron ore.  Cyprus recently announced plans to merge with Amax Inc. (NYSE: AMX), another leading U.S. mining company.
                       CYPRUS MINERALS CO.
                 Consolidated Statement of Income
               Three and Six Months Ended June 30
               (In Millions, Except Per Share Data)
                               Three Months Ended   Six Months Ended
                                    June 30,            June 30,
                                 1993      1992      1993      1992
    Revenue                   $  453.6  $  403.6  $  828.3  $  802.0
    Costs and Expenses           346.2     783.7     699.1   1,187.5
    Income (Loss)
     From Operations             107.4    (380.1)    129.2    (385.5)
    Interest Income                1.6        .6       3.2       1.5
    Interest Expense              (7.7)     (5.2)    (14.3)    (10.5)
    Capitalized Interest           ---       1.2       ---       3.1
    Equity Investments
     and Other                     4.0      (4.8)      4.0      (4.9)
    Income (Loss) Before
     Income Taxes                105.3    (388.3)    122.1    (396.3)
    Income Tax (Provision)
     Benefit                     (23.3)     94.7     (28.5)     96.3
    Income (Loss)
     Before Cumulative Effect
      of Accounting Change        82.0    (293.6)     93.6    (300.0)
    Cumulative Effect of
     Accounting Changes for
      Benefits (Net of Tax)        ---       ---       ---     (87.6)
    Net Income (Loss)             82.0    (293.6)     93.6    (387.6)
    Preferred Stock Dividends      ---      (3.7)      ---      (7.4)
    Income (Loss) Applicable
     to Common Shares         $   82.0  $ (297.3) $   93.6  $ (395.0)
    Earnings (Loss)
     Per Common Share         $   1.73  $  (7.60) $   1.98  $ (10.11)
    Excludes 1993 Sale of LTV Claim, and 1992 Second Quarter Write- downs and First Quarter Reorganization Expenses and Cumulative Effect of Accounting for Benefits ("Special Items").
    Net Income                $   23.0  $   21.4  $   18.6  $   34.2
    Preferred Stock
     Dividends                     ---      (3.7)      ---      (7.4)
    Income Applicable
     to Common Shares         $   23.0  $   17.7  $   18.6  $   26.8
    Earnings Per Common Share $    .49  $    .45  $    .39  $    .69
    Weighted Average Common
     Shares Outstanding
     (In Thousands)             47,281    39,111    47,330    39,077
    Common Shares Outstanding
     at End of Period              ---       ---    47,282    39,172
    Note:    The financial results for 1992 have been restated to
             reflect the retroactive application of accounting
             changes for postretirement and postemployment benefits
             (SFAS 106 and SFAS 112).
                       CYPRUS MINERALS CO.
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Date:Jul 27, 1993
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