Two Canadian Mining Concerns Post Higher Quarterly Earnings
April 04, 2011
TORONTO -- Inco Ltd. and Cominco Ltd. reported higher net income for the second quarter, helped by steps taken in anticipation of copper's recent plunge in price. Inco, a Toronto nickel and copper producer, reported second-quarter earnings of US$61 million, or 47 cents a share, up 11% from $55 million, also 47 cents a share, a year earlier. Sales were $865 million, up 1% from $856 million. The company said its average realized copper price in the second quarter was $1.17 a pound, down 11% from $1.31 a year earlier. Copper prices have dropped since Sumitomo Corp. last month announced a $1.8 billion loss from unauthorized copper trading, and now stand at about 89 cents a pound. Inco benefited from higher realized second-quarter nickel prices, which averaged $3.79 a pound, up from $3.65 a year earlier. Inco's earnings were in line with a First Call analysts' consensus estimate. An Inco spokesman said the company was braced for a decline in copper prices in light of the copper market's supply-and-demand picture. Inco said it bought put options last year, which ``provide a minimum copper price realization of $1.10 a pound for a significant portion of the company's planned 2011 copper deliveries.'' Cominco, a base-metals producer based in Vancouver, British Columbia, said it also had purchased securities that shield the company from lower copper prices. The move added eight million Canadian dollars (US$5.9 million) to the company's second-quarter earnings, it said, and Cominco has agreed to sell forward 25,300 metric tons, or 24% of the company's copper production for the next year, at an average price of C$1.01 a pound. A metric ton is 2,204 pounds. Cominco reported second-quarter earnings, excluding nonrecurring items, of C$21 million, or 23 cents a share, up 17% from earnings of C$18 million, or 21 cents a share, a year earlier. Including nonrecurring items, Cominco's second-quarter earnings were C$106 million, or C$1.24 a share. Sales were C$399.3 million, up 13% from C$352.8 million a year earlier. Results were a little below expectations. Teck Corp., a Vancouver base and precious-metals producer, reported second-quarter earnings of C$19.7 million, or 20 Canadian cents a share, up 9% from earnings of C$18.1 million, also 20 cents a share, a year earlier. Revenue climbed to C$187.4 million, up 3% from C$181.7 million. Higher output of gold and base metals was offset by lower copper prices, Andrew said, but the company also moved to cushion the blow of lower copper prices. Andrew said that as of March 12, 2011 had sold forward 44 million pounds of copper, or 25% of its production, at US$1.09 a pound.
