Boliden Limited reports third quarter 2000 results

BOLIDEN LIMITED REPORTS THIRD QUARTER 2000 RESULTS (All dollar amounts are in United States dollars) Overview * Strong improvement in operations. Positive operating income (excluding write-off and unusual charges) and cash flow. * Rönnskär +200 expansion project completed on time and within budget. Production commences in August 2000. * Good progress with capital management program. - Action plan to improve performance of Swedish mining operations. - Decision not to make further investments in Apirsa. - Letter of intent to sell 50% interest in Norzink. TORONTO, CANADA (October 25, 2000) - Boliden Limited today reported its operating results for the third quarter and the first nine months of 2000. The Company reported operating income of $6.9 million for the quarter (after excluding $210.5 million write-off and unusual charges) and an operating loss of $34.2 million for the nine months ended September 30, 2000 (after excluding $210.5 million write-off and unusual charges) compared with an operating loss of $14.7 million for the third quarter of 1999 and $64.9 million for the nine months ended September 30, 1999. The operating income for the quarter compares with an operating loss of $34.7 million for the second quarter of 2000. The principal reasons for the change are higher zinc and copper prices and higher mining and smelting production. The $210.5 million write-off and unusual charges for the quarter comprise the write-off and charges related to the Company's investment in the Los Frailes mine in Spain ($189.8 million), the restructuring charge on account of the downsizing at the Company's corporate offices in Toronto and Stockholm and at its Swedish mining operations ($10.4 million) and the financial statement recognition of accrued pension liabilities for Swedish mining employees following changes in the collective agreement between Swedish mining employers and employees ($10.3 million). After accounting for interest expense and income taxes, the Company reported a net loss of $195.3 million or $0.90 per common share for the quarter and $248.1 million or $1.38 per common share for the nine months ended September 30, 2000 compared with a net loss of $3.6 million or $0.04 per common share for the third quarter of 1999 and $58.3 million or $0.57 per common share for the nine months ended September 30, 1999. The net loss for the quarter compares with a net loss of $34.4 million or $0.17 per common share for the second quarter of 2000. Cash provided by operations before non-cash working capital changes was $23.5 million or $0.11 per common share for the quarter and $19.0 million or $0.10 per common share for the nine months ended September 30, 2000 compared with cash provided by operations of $7.6 million or $0.07 per common share for the third quarter of 1999 and cash used by operations of $9.0 million or $0.08 per common share for the nine months ended September 30, 1999. The cash provided by operations before non-cash working capital changes for the quarter compares with cash used by operations of $15.6 million or $0.07 per common share for the second quarter of 2000. CAPITAL MANAGEMENT PROGRAM At the beginning of the quarter, the Company's executive management committee initiated a capital management program aimed at restoring the Company's financial strength and operating flexibility. The capital management program includes reducing costs, increasing productivity, postponing discretionary expenditures, securing partners for those operations that require non-discretionary expenditures and selling non- strategic assets. The executive management committee also initiated a strategic review of all the Company's operations. The strategic review will result in the development of a revised long-term plan for the Company scheduled for the fourth quarter of the year. The following is a summary of third quarter developments in the capital management program. Reducing Costs The Company has begun implementing its previously announced intention to transfer many of the activities currently being carried out in its Toronto office to Sweden and many of the activities currently being carried out at its Stockholm office to its operating units. As a result of these activities, both offices will be downsized. Approximately 50 employees will be affected by the downsizing. The Company has also implemented an action plan aimed at improving the performance of its Swedish mining operations. The action plan includes a new management structure for the Swedish mining operations, as well as the technology and exploration groups, and a downsizing of the Boliden Area Operations and the office located in the Town of Boliden. Approximately 106 employees will be affected by the downsizing. The downsizing is expected to result in cost reductions of $10.1 million per year beginning in 2001. The Company has also leased newer, smaller and less expensive premises outside Stockholm. The Company will transfer the remaining functions at its Stockholm office to these new premises in February 2001. Increasing Productivity The Company has introduced new shift change procedures at its Aitik mine which will significantly increase effective worktime at the mine. These procedures will be introduced at the Company's other mining operations in due course after appropriate consultation. The completion of the Rönnskär +200 expansion project will reduce Rönnskär's cash operating costs by between 25% and 30% per unit of copper cathode produced once the smelter is fully operational in early 2001. Postponing Discretionary Expenditures During the quarter, the Company advised its Spanish subsidiary, Boliden Apirsa SL (Apirsa), that it was not prepared to make any further investments in Apirsa, including financing the next phase of the mine plan for Apirsa's Los Frailes mine. Following receipt of this advice, Apirsa decided to complete the current phase of the mine plan for Los Frailes - the mining out of pit 2, but not to proceed with the next phase - the pushback for pit 3. In order to preserve its assets, to pay creditors in an orderly manner and to ensure that operations at Los Frailes continue until the planned completion of pit 2 in October 2001, Apirsa has filed a court application for commencement of "suspension de pagos" proceedings (similar to Canadian CCAA and United States Chapter 11 proceedings). Securing Partners for Operations that Require Non-Discretionary Expenditures The Company has begun a process aimed at securing a partner for its Myra Falls and Lomas Bayas mines. A confidential information memorandum has been prepared for each of the mines and site visits have begun. The process may affect the carrying value of the Company's investment in Myra Falls and Lomas Bayas. Selling Assets Shortly after the end of the quarter, the Company's subsidiary, Boliden Mineral AB, and Rio Tinto signed a letter of intent to sell to Outokumpu Oyj their respective 50% interests in Norzink A/S, the owner and operator of the Norzink zinc smelter and refinery and aluminum fluoride plant located near Odda on the west coast of southern Norway, for purchase consideration consisting of $180 million cash plus a profit participation of up to $10 million payable if the quarterly average zinc price during the period 2001 - 2004 exceeds $0.54 per pound. The transaction, which is scheduled to close before the end of 2000, is subject to completion of satisfactory due diligence, negotiation and settlement of satisfactory definitive agreements, receipt of all required regulatory consents and approvals of the respective boards of directors of the parties. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/10/26/20001026BIT00010/bit0001.doc The full report http://www.bit.se/bitonline/2000/10/26/20001026BIT00010/bit0002.pdf The full report