VANCOUVER (CP) -- Teck Cominco Ltd. [TSX:TCK.B; NYSE:TCK] says profit was down ''significantly'' in the fourth quarter after it was hit by millions in writedowns related to investments in its suspended Galore Creek project, troubled Tahera Diamonds Corp. and a slump in base metal prices.
Vancouver-based Teck reported net earnings of C$280 million or 63 cents per diluted share in the fourth quarter compared with a profit of C$866 million or C$1.99 per diluted share in the fourth quarter of 2006.
The results include after-tax writedowns of C$51 million related to its investment in Tahera Diamonds [TSX:TAH] and its Lennard Shelf and Pend Oreille zinc mines, as well as a C$33 million after-tax equity loss related to its investment in Galore Creek.
Teck also said Monday it recorded about C$94 million after-tax settlement adjustments as base metal prices fell substantially in the quarter.
It said prices for zinc were down 46% in the fourth quarter, while copper prices fell 13% and coal prices were 26% lower compared to a year ago.
For the year, the company said profit was C$1.6 billion or C$3.72 per share, compared to C$2.4 billion or C$5.60 per share the year before.
''While we faced a number of challenges in 2007, it was still a year with several solid accomplishments for the company,'' president and CEO Don Lindsay said in a release late Monday.
''We delivered the second highest earnings in our history at C$1.6 billion and returned just over C$1 billion to our shareholders through dividends and our share buy-back program, amongst the very highest returns in Canadian business.''
Teck also said Monday that, due to soaring costs at the Petaquilla copper project ''there can be no assurance that we will participate in the development of the project''.
Last week, an interim study released by Teck and its partners on the project - Inmet Mining Corp. [TSX:IMN] and Petaquilla Copper Ltd. [TSX:PTC] - reported the Panama project will cost US$3.5 billion to develop, more than double an earlier estimate from a year ago.
The increase in costs at Petaquilla comes as the mining industry around the world deals with rising costs and is the second project in recent months Teck has been involved in to see its expected price soar.
Teck and NovaGold Resources Inc. [TSX:NG; AMEX:NG] called a halt to work at their Galore Creek joint-venture in November after rising labour and materials costs and higher-than-expected expenses related to a tailings pond drove the projected cost up from US$2 billion to as much as US$5 billion.
Teck said Monday the company continues to view Galore Creek ''as a substantial resource and have commenced a comprehensive review to evaluate alternative development strategies.''
However, it added ''there can be no assurances that our review will result in a commercially viable project or that a future writedown will not be required.''
The C$26 million pre-tax writedown in the quarter of its investment in Tahera comes after the company filed for creditor protection last month after facing operating problems and mounting costs at its Jericho mine in Nunavut.
Teck said the writedown from its Lennard Shelf and Pend Oreille zinc mines, for C$31 million and C$12 million respectively, both before tax, are due to them operating with lower-than-expected ore grades and higher unit operating costs.
The Lennard Shelf mine, in which Teck holds a 50-per-cent joint venture interest, recorded an operating loss of C$7 million in the fourth quarter as a result of lower-than-expected production levels and higher unit-operating costs.
Teck said it is reviewing alternatives for the Lennard Shelf mine ''including various cost reduction initiatives and a shortening of its life.''
The Pend Oreille mine recorded a C$6 million operating loss in the fourth quarter compared with an operating profit of C$7 million last year due mainly to higher operating costs, a lower zinc price and C$2 million of negative price adjustments, Teck said.
Prior to the announcement, Teck shares closed down 18 cents at C$34.55 on the Toronto Stock Exchange Monday.
(c) The Canadian Press 2008
