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Abstract
Revenues from concentrate sales were $393,257 for the year ended December 31, 2006 compared with $228,235 in 2005. The increase in revenue in 2006 over 2005 was largely due to the average copper price received upon shipment for 2006 being $2.96 compared to a price of $1.65 in 2005. The average LME copper price was $3.05 in 2006 compared to $1.67 in 2005. Refining and treatment charges, which are deducted in arriving at revenue, were $46,802 for the year ended December 31, 2006 compared to $31,011 in 2005 (see Offsite Costs).
Operating income was $181,212 for the year ended December 31, 2006 compared to $73,608 in 2005 reflecting higher prices for copper and gold. The higher copper price coupled with higher hedge volumes resulted in a realized loss of $143,930 in 2006 compared to $26,207 in 2005 with the resulting net income in 2006 being $32,224 in 2006 compared to a loss of $2,023 in 2005. Net working capital changes were a source of $46,002 of cash in 2006 compared to a net use of cash of $18,791 in 2005 reflecting the substantial change in the marked to market amount of settlement adjustments from positive to negative. The resulting cash from operations was $90,552 in 2006 compared to $29,670 for 2005.
The realized loss on copper and gold forward sales contracts was $24,048 and $1,133 respectively in the fourth quarter 2006 compared to a realized loss of $15,149 and $208 on the copper and gold forward sales contracts in the fourth quarter of 2005. The increase in realized losses in 2006 compared to 2005 reflects the impact of the copper hedging program entered into in the fourth quarter of 2005 and higher copper prices in 2006 compared to 2005. During the quarter ended December 31, 2006 the Company recorded an unrealized gain on derivatives of $53,543 compared to an unrealized loss of $20,788 for the same period in 2005. The gain arose due to the copper price decreasing during the quarter ended December 31, 2006 and the 2005 loss arose due to the copper price increasing during the quarter ended December 31, 2005 (see Financial Instruments and Other Instruments).