Mining firm posts jump in income
Prices for silver, copper help boost Revett's profits after a net loss in 2009
Treva LindApril 7th, 2011
Spokane Valley-based mining company Revett Minerals Inc. has reported significant improvement in its financial results for 2010, posting net income of $4.4 million, or 16 cents a share, compared with a 2009 net loss of $4.9 million, or 23 cents a share.
The company attributes its improved earnings mostly to higher silver and copper prices, as well as a slight increase in production at its Troy Mine, located southeast of the small town of Troy in northwestern Montana. Total company revenue for 2010 was $47 million, compared with $33 million during 2009.
Ken Eickerman, Revett's chief financial officer, says the average price for copper in 2010 was $3.42 per pound, up sharply from an average of $2.33 per pound in 2009. Meanwhile, he says the average price per ounce for silver in 2010 was $20.16 per ounce, up from $14.67 in 2009.
The mine last year produced 1 million ounces of silver, down slightly from 1.1 million ounces in 2009, but it had a slight increase in copper production, going to 8.7 million pounds in 2010 from 8.6 million pounds a year earlier.
"What we really benefited from was the price," for silver and copper, Eickerman says.
The company also worked last year on moving forward with its plan to develop the Rock Creek silver and copper mining project, about 25 miles southeast of the Troy Mine. In 2010, the company purchased the last remaining 2 percent net royalty that was held previously by a company called Kennecott Royalty, says Eickerman.
"We plan 100 percent going forward with the Rock Creek project," he says, adding that the company has submitted a supplemental environmental impact statement.
That triggers an approval process through the Montana Department of Environmental Quality and the U.S. Forest Service, adds Eickerman. "We hope in about a year to be completed with that, and that would allow further development, or phase one, of the Rock Creek project."
Phase one would take about two to three years, and once that's completed, the company hopes to start commercial mining of the site, Eickerman says.
The company experienced some higher costs last year after it restored full pay for mine employees, who had a temporary 10 percent pay cut in 2008, and for corporate-office staff that saw a 20 percent pay cut that same year, adds Eickerman. He says other noncash items that were higher in 2010 included stock-option expense for employees, which must be expensed out on paper, and meant $860,000 recorded for those stock option grants.
He says a major highlight for the company was improving its working capital.
"At the end of 2009, we had working capital of negative $200,000," Eickerman says. "At the end of 2010, we ended up the year with $10.6 million in working capital."
Additionally, last year, Revett says it completed a company debt restructuring program, and a consolidation of the company's common shares for listing in the U.S. It now has 33.5 million shares issued and outstanding and 36.6 million fully diluted shares.
Revett had announced in fall 2010 that it completed a roughly $3 million private placement to help it accelerate exploration and further development of the Troy Mine.