Date: Thu, 20 Nov 1997 22:40:50 GMT Server: Apache/1.2.4 Last-Modified: Tue, 17 Jun 1997 15:10:40 GMT ETag: "dd48f-2001-33a6a8f0" Content-Length: 8193 Accept-Ranges: bytes Connection: close Content-Type: text/html
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NEW YORK, N.Y., April 26, 1996 -- Southern Peru Copper Corporation (SPCC) had an outstanding year in 1995 with record sales and profits, increased production, lower costs and robust metals prices. That was the message from SPCC President and Chief Executive Officer Charles G. Preble at SPCC s shareholder meeting here yesterday. At the meeting, common stockholders of SPCC elected Ambassador Everett E. Briggs, president of the Americas Society and the Council of the Americas, and John F. McGillicuddy, former chairman of the board and chief executive officer of Chemical Banking Corporation, to represent them for one-year terms. Common shareholders have a 17.0% interest in SPCC. Elected directors by the Class A Common Stockholders were Richard de J. Osborne, Kevin R. Morano, Augustus B. Kinsolving, Francis R. McAllister, Robert J. Muth, Robert M. Novotny, Michael O. Varner, David B. Woodbury, Jay A. Pritzker, Robert A. Pritzker, Douglas C. Yearley, J. Steven Whisler and Charles G. Preble. Class A Common Stock is held by the founding shareholders of SPCC. ASARCO Incorporated holds 54.1% of SPCC, a subsidiary of the Marmon Corporation owns 15.0% and Phelps Dodge Overseas Trading Company owns 13.9%. Coopers & Lybrand was elected to serve as independent auditors for the Company. Preble told shareholders that in 1995 SPCC accomplished a major corporate restructuring with the issuance of new common shares in exchange for existing labor shares; completed most of its $445-million expansion and modernization program and doubled its proven and probable copper ore reserves. SPCC s 1995 net earnings before nonrecurring items were $217.8 million, or $3.31 per share, compared with $78.6 million in 1994, or $1.20 per share. Nonrecurring items of $12.6 million in 1994 related to sales of noncore assets. Earnings in the first quarter of 1996 were $49.1 million, or 61 cents per common share, compared with proforma earnings of $52.5 million for the first quarter of 1995, or 65 cents per share, adjusted to reflect the labor share exchange as if it had occurred on January 1, 1995. The Board of Directors declared a dividend of 30 cents per common share payable June 3, 1996 to shareholders of record at the close of business on May 16, 1996. According to Preble, Southern Peru successfully completed its offer to exchange new common shares for existing labor shares at the end of 1995. Labor shares had been issued to workers beginning in the 1970s under prior Peruvian law and were actively traded on the Lima Stock Exchange. More than 80% of the total labor shares were exchanged and SPCC common shares now are traded both on the New York Stock Exchange and the Lima Stock Exchange. Preble said that SPCC is nearing completion of its $445-million capital spending program which is designed to integrate the Company s operations, expand production, modernize equipment and add additional environmental facilities. SPCC s purchase of the government s Ilo refinery made SPCC an integrated copper producer and lowered the Company cash cost of producing copper by more than 5 cents per pound. Steps also have been taken to expand production. Preble said, New SX/EW facilities are now in operation and we produced our first cathode in the fourth quarter of 1995. We expect to produce 40,000 tons of copper per year at a cost of under 30 cents per pound, which will reduce our total average costs by five cents a pound. SPCC s cash costs, which were $1.03 per pound in 1990, fell to 67 cents in 1994 and 53 cents in 1995. Our costs in 1995 were favorably affected by the very high molybdenum by-product credits caused by high molybdenum prices. In 1996, with the new low-cost SX/EW production and a molybdenum by-product credit based on a $4 molybdenum price, we expect cash costs to be 56 cents per pound. SPCC increased its production 31% in 1995 over 1990 s production, to 279,000 tons. In 1996, production will increase another 16% due primarily to the new SX/EW production. Silver and molybdenum production also has increased along with the higher copper production. Preble said that SPCC has made substantial expenditures to further protect the environment. The Company spent $105 million for the construction of a sulfuric acid plant at the Ilo smelter, which was inaugurated January 19th of this year, and is constructing a new tailings disposal system to be completed in late 1996. SPCC s board of directors approved plans to spend an additional $35 million to expand the acid plant. Expansion of the plant will further reduce sulfur dioxide emissions from the smelter and will improve the ambient air quality. Preble told shareholders that SPCC s ore reserves also have increased. At the end of 1995 Southern Peru s proven and probable reserves totaled 1.3 billion tons of sulfide reserves and 678 million tons of leachable reserves. Additionally, 989 million tons of mineralized material is now being evaluated. With significant new reserves at both Cuajone and Toquepala, mine expansions are a real opportunity. We are considering an increase in mine production of as much as 200,000 tons per year, or about 70%, Preble said. Because the new reserves are contiguous to the existing pits most of the infrastructure necessary for large mining operations already is in place. We have a detailed expansion study underway which should be completed later this year. Major mine expansions, Preble continued, would require an expansion of smelting and refining capacity. Our current smelter was built with 1950s technology and modernized with the addition of a Teniente Converter and an acid plant. We currently process 1.25 million tons of concentrate at the smelter. Mine expansions would clearly dictate an increase in the size of our existing smelting capacity, Preble said. A new smelter would use modern flash smelting technology and would include a sulfur recapture rate at international standards. We have not decided whether such a plant would be built on a greenfield site or whether some portion of the existing plant would be retrofitted. The cost of such a plant would certainly exceed $500 million. We will also consider an expansion of the Ilo refinery. Preble said that while the total cost of such an expansion would be significant, construction would be phased in over a period of years. We will need committed financing before we begin construction and we will look to commercial banks, multilateral agencies and other lenders, including the public capital markets, to participate, Preble said. Preble said that the investment climate in Peru is good. Elections last year gave the present administration a clear mandate to continue reforms the government had begun. The economy in Peru continued to improve in 1995. GDP grew by 6.9% and inflation was 10.2%, the lowest in 23 years. SPCC is the largest mining company in Peru and operates two mines, a smelter and a refinery in the southern region of Peru, employing approximately 5,000 people. |
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