VANCOUVER (CP) -- Teck Cominco Ltd. (TCK.B) said it will decide later this year if it will go ahead with the Galore Creek gold-silver project in British Columbia, halted after costs more than doubled to about $5 billion.
CEO Don Lindsay said Thursday the company wants to see the results of a new viability study, to be released this fall, before making a decision on whether to restart the project.
The company said the decision is expected before it releases its third quarter results.
In an update filed with its second quarter earnings results, the company said it has "substantially completed demobilization activities" at Galore Creek, and that the property is now on care and maintenance.
Studies are now being done to re-evaluate the project, which originally was expected to cost $2 billion.
Teck and partner NovaGold Resources Inc. (NG) said last fall they were halting the project due to rising labour and materials costs and higher-than-expected expenses related to a tailings pond.
The companies are now considering three possible new plans for Galore Creek they hope will curb expenses.
If the project goes ahead, a feasibility study will be done in 2009, followed by a couple years of obtaining proper permits, which targets production to begin in about five years.
"We remain hopeful that an alternative development strategy can be identified," Teck said.
However, "there can be no assurance that this work will result in a commercially viable project or that a future write-down of our investment will not be required."
The Galore Creek update came as Teck reported second-quarter earnings late Wednesday of $497 million, up from $485 million last year on strong copper and coal sales.
The Vancouver-based miner said the earnings amounted to $1.12 per share and included negative after-tax pricing adjustments of $7 million related to a fall in zinc prices. The miner also took a $12 million write-down against its Lennard Shelf assets.
Teck and partner Xstrata Zinc announced the closure of the Pillara zinc mine at Lennard Shelf in Western Australia in July due lower prices, a stronger Australian dollar, high operating costs and lower than planned production. Operations are expected to cease by early August.
Net earnings from continuing operations were $504 million, or $1.14 per share, in the second quarter, before the $7 million loss relating to discontinued operations.
Revenues from operations were $1.9 billion, $309 million higher than the comparable period in 2007.
The average analyst estimate had been for earnings of $1.02 per share, according to Thomson Financial. The average revenue estimate had been for $1.65 billion.
The sales were boosted by revenues from three mines acquired on when Teck purchased Aur Resources Inc. last year, adding $258 million in revenues in the quarter and a $266 million increase in coal revenues.
Teck shares were trading down $0.75 or about 2% at $38.43 on the Toronto Stock Exchange Thursday.
(c) The Canadian Press 2008
