1983 the Company Mined 81.0 Million Tonnes of Material
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Bougainville Copper Limited D/I:A'8o Notice of Meeting Bougainville Copper Umited operates a large open pit mine and The Annual General Meeting of processing facility at Panguna on the Island of Bougainville in the North Bougainville Copper Limited will be Solomons Province of Papua New Guinea. It produces concentrate held at 10.00 a.m. on Wednesday, containing copper, gold and silver which is sold primarily under long 18th April, 1984 in the Panguna term contracts to smelters in Asia and Europe. Cinema, North Solomons Province, During 1983 the Company mined 81.0 million tonnes of material. Papua New Guinea. Of this, 47.7 million tonnes of ore was treated to produce 636 932 A separate Notice of Meeting is tonnes of copper concentrate. This concentrate contained 183 191 enclosed. All shareholders are tonnes of copper, 18 002 kilograms of gold and 47 414 kilograms of cordially invited to attend. silver and had a gross sales value of K454.6 million (of which copper and gold contributed 52% and 46% respectively). Directors The mine commenced commercial production in 1972 and since start D. C. Vernon (Chairman) up has produced concentrate containing 2.1 million tonnes of copper, Sir Frank Espie, O.B.E. 223 222 kilograms of gold and 523 692 kilograms of silver. This R. H. Harding production had a value of K3.1 billion which represents over 50% of the country's exports over that period. During this time contributions .P. W. Quodling to the Government in the form of dividends, taxes and royalties J.T Ralph totalled K623 million which represents approximately 18% of internally W. D. Searson generated Govemment revenue. Further, the Company's presence on Bougainville Island has promoted the development of significant local Officers business enterprises to provide goods and services required for the mining operation and for the island's residents. P. W. Quodling (Managing Director) The Company makes a substantial contribution to the country's J. L. Auna workforce as it employs approximately 3800 persons, of whom 80% (Executive Manager - Personnel) are Papua New Guinea citizens. Company training programmes have R. J. Cornelius resulted in considerable progress in the localisation of the Company's (Executive Manager - employees and have significantly added to the number of skilled Concentrator) workers to the Papua New Guinea workforce. J. B. Holt The mine is located about 600 metres above sea level in rugged (Executive Manager - Mine) terrain. Equipment and processes used in the production of V. P. McCartin concentrate follow conventional lines, although the operation is (Executive Manager - unusual in the very large tonnage of material treated. This is necessary Support Services) because of the low grade of the deposit. The end product, copper R. N. Prideaux cOl1centrate, is pumped 27 kilometres through a 15 centimetre (Executive Manager - diameter pipeline from the mine site to the Company's port at Commercial) AnewaBay. J. M. Tynan Bougainville Copper Umited is owned 53.6% by CRA Umited. (Executive Manager - The Papua New Guinea Govemment and its nominee The Investment Technical Services) Corporation of Papua New Guinea own 20.2% while the remaining A. W. Patterson 26.2% of the share capital is held by public shareholders. (Secretary) Bougainville Copper Limited Stock Exchanges: Contents (Incorporated in Papua New Guinea) Listed on the principal exchanges in all Year in Brief 2-3 Registered Office: Australian states and New Zealand. Panguna, Province of North Solomons, Auditors: Chairman's Statement 4-5 Papua New Guinea. Coopers & Lybrand. Review of Operations 7-10 Principal Registered Office in Australia: Bankers: Declining Ore Grades 12-13 55 Collins Street, Melbourne. Bank of America NT & SA. Value Added Statement 14 Telephone (03) 658 3333. Commonwealth Trading Bank of Australia. Share Registers: Papua New Guinea Banking Corporation. Funds Statement 14 Victoria: 84 Flinders lane, Melbourne. Solicitors: Directors' Report Telephone (03) 654 4899. Arthur Robinson & Co. & Financial Statements 15-24 A.G.T.: Level 4, 24 Marcus Clarke Street, Gadens. Canberra City. P.N.G.: Panguna, Province of North Solomons. United Kingdom: clo Central Registration Limited. 1 Redcliff Street, Bristol. 1983 1982 ..• Concentrate production (tonnes) 636932 598634 . containing copper . (Ionnes) 183191 170004 gold ,kilograms) 18002 17528 silver (kilograms) 47414 43153 Net sales revenue (K'ooo) 389870 281217 Net earnings aftei tax (K'000) 54660 11 210 Earnings per share (toea) 13.6 2.8 Shareholders' funds (K'000) 590944 588422 Return on shareholders' funds (per cent) 9.3 1.9 Gross dividends (K'ooO) 52138 10027 per one kina share (toea) 13.0 2.5 Depreciation (K'OOO) 47024 44211 Government royalties (K'OOO) 4738 3522 Taxation (K'OOO) 46963 17261 Number of employees at 31 December 3809 3930 Concentrate vessel Bougainville Maru ,arriving at AneWa Bay' Bougainvi/le. '. JIInll8rY: ..... RrSt month toexceed4 million fell below US$400 level. tonnes ore milled. i declared. November: February: Lime Purchase Agreement signed Crew 3 in crusher operations July: . with Bougainville Limestone Mining passed 11 years with no lost time Largest singleooncentrate shipment Ply. Ltd. Tailings water reclamation accidents. Gold price reached of 37 637 dry metric tonnes sent to scheme approved. peak for year of US$510/oz. Europe. Record monthly tonnage of 98 551 dry metric tonnes was December: March: shipped, Production for year was 636 932 Kina devalued following devaluation tonnes of copper concentrate. of Australian dollar. August: Average copper price for year of Government announced 1.5% cut US72c1lb. Net earnings for the year April: in company tax and 2"h increase were K54.6 million. Mainframe computer upgraded to in dividend withholding tax. improve speed and capacity. September: May: Concentrate grade for quarter Copper price reached peak for highest since start up (30.99% Cui. year of US82c1lb. D. C. Vernon, Chairman. The Company's net earnings The subject of the feature article million Revolving Credit Facilities for 1983 were K54.6 million an in this annual report is "Declining and US$90 rnillion Standby Facilities increase of K43.4 million over the Ore Grades". This characteristic provide the required flexibility 1982 yeac While this represents of the Panguna deposit has been within the Company's financing an encouraging result when the referred to In annual reports from reserve. copper industry is operating at time to tirne and it is hoped The Company paid an interim depressed levels, the return on this article will provide a better dividend in November of five toea shareholders' funds of 9.3% understanding of why ore grades per share. The Directors have remains inadequate. will decline and what rneasures declared a final dividend of eight The past year has seen the are being taken to offset this toea per one kina share. The total western economies emerging from decline. Careful planning will. be dividend of thirteen toea per share the rnost severe recession since required to ensure that copper represents approximately 95% the Great Depression of the production levels are maintained of the Company's net earnings 1930's. The recovery commenced to fulfil long terrn sales agreements, for 1983. allow a flexible marketing strategy in the consumer goods sector The outlook for 1984 remains and housing industry in the United and secure the economic viability of the operation. uncertain. The coupling of States of Arnerica but to date has increases in supply with low resulted in only slow growth in During the year the Cornpany demand levels provides little those areas of capital goods has continued its drive to contain prospect for a substantial where copper is used more costs with the result that only a improvement in copper prices. In intensively Consequently world rnodest increase in the unit cost addition, copper is coming under copper inventory levels remain of concentrate produced has an increasing challenge from fibre high. The average copper price occurred. In tirnes when the optics, aluminiurn and a trend for 1983 was US72c/ib corn pared development of large scale low towards minimising raw material with US67c/ib for 1982, but grade deposits is being deferred use in manufacturing. To maintain averaged only US64c/ib for and other operations have ceased the momentum of the economic December. Any significant production, Bougainville Copper recovery it will be necessary for irnprovement in the copper price Lirnited has established itself as increased capital investment to is dependent upon increased an efficient cost competitive occur during 1984. This may dernand or further reductions in operation. result in some increased demand the world's copper supply with a On 8th March, 1983, the kina for copper. However, the current consequent reduction In inventory was devalued by 5.5% against a large world stocks must be reduced levels. weighted average of currencies substantially before any durable The commissioning of the eleventh in response to a devaluation of price increases can be expected. and twelfth ball mills during 1982 the Australian dollar. As all sales Gold will remain a significant made a significant impact on the proceeds are receivable in US contributor to the Company's earnings for 1983. Milling capacity dollars the devaluation resulted earnings. It will again be necessary increased to 130000 tonnes per in increases in sales revenue. during 1984 for the Company to day with a resultant improvement The beneficial irnpact of the continue its drive to contain in copper production. This devaluation was partly eroded costs to remain competitive in expansion in capacity will assist by increases in some operating world markets. The economic in partially offsetting the effect of costs, interest, and exchange advantages of large scale operation declining ore grades over the losses on borrowings. places the Company in a position corning years. The improvement in cash flows to take full advantage of any has enabled a net reduction of upturn in metal prices.