Minorco invests in gold

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The Independent Online
Minorco, Anglo American's offshore minerals and mining arm, reported strong earnings in its industrial, mineral and agribusiness divisions yesterday in accounts that covered an 18-month period following the change of the year end from June to December.

Pre-tax profits were $540m (£337.5m) for the 18 months to December on sales of $4.6bn. For the year to June 1993, profits were $340m on sales of $2.7bn.

Chairman Julian Ogilvie Thompson said: "Minorco will benefit in 1995 from the restructuring of our gold interests and the developments in our base metals and paper and packaging segments." He added that Minorco has six major new mining projects under development.

Problems at the North American gold producer Jerritt Canyon resulted in an exceptional charge of $69m partly related to the development of an underground mine. Minorco said Jerritt Canyon should be profitable this year after two years of losses. Jerritt Canyon, together with a new mine at Cresson in Colorado should be producing 320,000 ounces of profitable gold this year.

The base metals division also disappointed due to a weak zinc price and the exhaustion of some mines. Paper and packaging performed well and the company expects a £250m newsprint facility in Aylesford, Kent to start manufacturing newsprint from waste paper by the middle of this year.

In November Minorco acquired control of the Lisheen zinc deposit in County Tipperary after a bitter battle. Minorco paid £77m for a 50 per cent stake and management control. Development of the project is expected to cost around $180m.

Gold, zinc, copper and nickel projects are at the feasibility study stage in Chile, Argentina, Venezuela and Brazil. The company has increased its interest in the Collahuisi copper mine in Chile to 50 per cent since the year end. Estimated capital costs are $1.3bn and production is expected to start in late 1998.

The company raised the dividend from 57 US cents for the 12 months to June 1993 to 95 cents for the 18 months to December 1994.