Breakwater has four producing zinc mines: the
Myra Falls mine in British Columbia, Canada; the
El Mochito mine in Honduras; the
El Toqui mine in Chile; and the
Langlois mine in north western Quebec, Canada.
In 2008, the Company plans to:
- Continue its investment in capital projects to increase the productivity and efficiency of its operations
- Maintain the high level of investment in overall explorations
- Advance mine exploration and development to significantly increase reserves and resources
- Acquire value added projects or assets
The Company’s projected payable metals production for 2008 is:
| |
(payable) |
Zinc
Copper
Lead
Silver
Gold |
137,400 tonnes
8,500 tonnes
18,700 tonnes
2,809,000 ounces
42,400 ounces |
These projections are based on the following:
| Forecast 2008 |
Myra Falls (1) |
El Mochito |
El Toqui |
Langlois |
All Sites |
Ore Milled (tonnes)
Zinc (%)
Copper (%)
Lead (%)
Gold (g/t)
Silver (g/t) |
766,000
6.4
1.1
0.6
1.2
48 |
653,000
5.6
n/a
2.8
n/a
110 |
522,000
6.9
n/a
1.0
1.0
23 |
675,000
8.5
0.5
n/a
n/a
n/a |
2,616,000
6.9
0.8
1.4
1.1
62
|
Payable Metal
Zinc (tonnes)
Copper (tonnes)
Lead (tonnes)
Silver (ounces)
Gold (ounces) |
37,100
6,100
800
653,000
14,000 |
27,500
n/a
14,600
1,611,000
n/a |
27,600
n/a
3,300
205,000
27,200 |
45,200
2,400
n/a
340,000
1,200 |
137,400
8,500
18,700
2,809,000
42,400 |
(1) The current labour agreement with Myra Falls employees, represented by Canadian Auto Workers Union, expires March 31, 2008. Accordingly, as well as the known and unknown risks to meeting production forecasts faced by all mining companies, in the event we are unable to conclude an agreement for a new labour contract at Myra Falls, the Myra Falls production forecast might become unattainable.
Capital Expenditures
Capital expenditures for the Company’s operations are planned to be $105.3 million in 2008. Of this amount, the bulk of funds are related to the development of Langlois and the satellite Grevet B deposit, as well as mine development at each of the minesites and continuing improvements to the Mochito and Toqui mines.
| Capital Expenditures ($ millions) |
2008 Projection |
Mochito
Toqui
Langlois
Myra Falls |
$24.2
$26.0
$42.4
$12.7 |
| Total Capital |
$105.3 |
Exploration
It is expected that the Company will spend $36.9 million on exploration expenditures in 2008 with the objective of substantially increasing the mineral resources (both measured and indicated and inferred) at Mochito and Myra Falls as well as advancing a number of greenfield exploration targets like the Coulon joint venture project. Additionally, the Company will focus on continuing to add to the proven and probable mineral reserves at Langlois and Toqui. The breakdown of exploration expenditures is set forth in the following table.
| (Capital and Expense ) ($ millions) |
2008 Projection |
|
Mochito
Toqui
Langlois
Myra Falls
Others |
4.4
4.9
4.5
6.0
17.1 |
| Exploration Expenditures |
36.9 |
Sensitivity to Metal Prices and Exchange Rates
The Company’s cash flow and net earnings are sensitive to the price of zinc and the US$/C$ exchange rate. The following table provides the Company’s estimates of the sensitivity of cash flow to changes in the various metal prices and US$/C$ exchange rate movements based on projections for 2008. The Company’s sensitivities for 2008 are based on zinc at $1.00 per pound, copper at $3.40 per pound, lead at $1.30 per pound, gold at $750 per ounce, silver at $13.75 per ounce and a US$/C$ exchange rate of parity. The sensitivity table assumes that all other prices and/or the exchange rate are held constant and that the production forecasts set forth above are met.
Sensitivity to Prices
| Variable |
Change |
Sensitivity
($000’s) |
|
Zinc
Copper
Lead
Silver
Gold
Exchange Rate |
+/- 10%
+/- 10%
+/- 10%
+/- 10%
+/- 10%
+/- 10%
|
22.6
6.3
3.7
3.2
2.8
-26.4/+21.6 |