Teck Cominco Ltd. July 23 reported a slight increase in profits to C$504 million or C$1.14 per share in the second quarter of 2008 compared to C$480 million or C$1.13 for the same period last year. On a year-to-date basis profits were C$847 million C$1.92 per share down from C$870 million or C$2.03 per share for the same period last year.
Teck Cominco President and CEO Don Lindsay said that the quarter was highlighted by the strong performance of the Vancouver, B.C.-based major’s copper division. Elk Valley Coal was a large contributor, benefiting from the phase in of the 2008 coal year prices of $275 per ton, up from the $93 million per ton 2007 coal year prices. The strong copper and coal performance was offset somewhat by weak zinc prices and a stronger Canadian dollar.
Lindsay said the outlook for the rest of 2008 looks favorable as the copper price remains high and we will have a much higher percentage of coal sold at the significantly higher 2008 coal year prices."
Lindsay also said that due to the decline in zinc prices, the stronger Australian dollar, high operating costs and lower than planned production, the Pillara zinc mine at Lennard Shelf became uneconomic and will be shut down in early August, 2008.
In Alaska, Teck Cominco reported a significant decrease in profits from Red Dog, while profits from Pogo increased.
Red Dog's operating profit, before pricing adjustments, declined to $55 million in the second quarter compared with $114 million in the same period last year. The decline in operating profit was due mainly to significantly lower zinc prices and the effect of the stronger Canadian dollar. Negative pricing adjustments of $5 million were recorded in the second quarter compared with $5 million of positive pricing adjustments in the second quarter of 2007.
Zinc production in the second quarter decreased by 8 percent to 130,000 tons compared with the same period last year due to unanticipated scaling in generator cooling lines resulting in an extended maintenance shutdown and lower recoveries as a result of ore characteristics.
Teck Cominco anticipates shipping 970,000 metric tons of zinc concentrate and 240,000 metric tons of lead concentrate during the 2008 shipping season which began July 11.This is about a 9 percent decrease from the record setting 2007 season.
The company is still seeking approval of a Supplemental Environmental Impact Statement for the Aqqaluk deposit, the next ore body scheduled to be developed by Red Dog. The mine's effluent discharge permit will be renewed in conjunction with the SEIS. In the interim, we are working with NANA Regional Corp. and the U.S. Environmental Protection Agency to ensure that the mine can discharge sufficient water to maintain a reasonable water balance in the tailings impoundment under its existing water discharge permit.
The company reports that it entered into a Memorandum of Understanding with the plaintiffs from the Village of Kivalina who had filed a complaint alleging violations of the Clean Water Act relating to discharge limits set by the current permits. If accepted by the court, the terms of the MOU will lead to a consent decree, settling the case.
Teck Cominco realized a C$6 million operating profit from its 40 percent share of the Pogo Gold Mine during the second quarter of 2008 compared with break-even results in the second quarter of 2007 when Pogo achieved commercial production. Gold sales of 86,000 ounces in the quarter were realized at an average price of $898 per ounce. Our target for gold production for the year of 340,000 ounces remains unchanged from our previous guidance.
The company says it expects to produce 340,000 ounces of gold at Pogo in 2008 and expects operating costs to remain near current levels for the balance of the year.
