Document 3NQ951JNevK6GdM4L8kJ3MOX6

Saint Joseph Lead Company Annual Report -- 1957 America's Corporate Foundation; 1957; ProQuest Historical Annual Reports pg- o_i . HARVARD UNiV. C.S. OF B.A. BaKER LIBRARY CORPORATION RECORDS DIVISION NINETY-FOURTH ANNUAL REPORT TO THE STOCKHOLDERS 1957 St. Joseph Lead Co. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY NINETY-FOURTH ANNUAL REPORT to the STOCKHOLDERS for the YEAR ENDED DECEMBER 31 1957 Transfer Office ST. JOSEPH LEAD COMPANY 250 Park Avenue, New York 17, N. Y. Registrar CITY BANK FARMERS TRUST COMPANY 22 William Street, New York 5, N. Y. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. TABLE OF CONTENTS ' '; Page Trustees and Officers ............................ . .................................................. 3 Highlights..................................................................................................... World Markets for Lead and Zinc. . ....................................................... 4 5 Earnings............................................. 5 Sales............................................. 6 Dividends..................................................................................................... Taxes on Income.......................................................................................... 6 6 Financing for 100,000 k.w. Josephtown Power Plant............................ 7 Working Capital........................................................................................... 7 Capital Expenditures...................... .............................................................. Deferred Profit Sharing Plan......................................................................... Southeast Missouri....................................... 7 8 8 Edwards and Balmat, New York.................................................................... Josephtown, Pennsylvania......................................................................... 8 8 Labor Relations................................................................................................ 8 Progress in New Areas..................................................................................... Viburnum Project....................................... 9 9 Pea Ridge Project................................. 9 Santander, Peru.................................................................................... 9 North Africa.......................................................................................... 9 Oil Exploration............................ 10 Cia Minera Aguilar, S.A. and Associated Companies.................................. Brunswick Mining and Smelting Corporation Limited............................ 10 10 Anti-Trust Suit................................................................................................ Organization Changes ..................................................................................... 11 11 Stockholders............................ 12 President's Report to Employees .............................................................. Mine La Motte Corporation . . . ......................................................... Stockholders............................ Conclusion...................................................................................................... 12 12 12 12 Lead and Zinc Statistics................................................................................... 13-14 Financial Statements and Accountants' Certificates..................................15-23 Proxy Information.......................................................................................... 24 General Counsel DEBEVOISE, PLIMPTON & McLEAN 20 Exchange Place New York 5, N. Y. Auditors HASKINS & SELLS 67 Broad Street New York 4, N. Y. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY INCORPORATED MARCH 25, 1864, UNDER THE LAWS OF THE STATE OF NEW YORK EXECUTIVE OFFICES 250 PARK AVENUE NEW YORK 17, N. Y. Board of Trustees Year Elected CLINTON H. CRANE...................................................................................................................... New York, N. Y. IRWIN H. CORNELL........................................................... Vice President, Cornell Iron Works, New York, N. Y. ANDREW FLETCHER . ................................................................................................................. ..... . President *HENDON CHUBB...................................................................................................... Chubb & Son, New York, N. Y. C. MERRILL CHAPIN, JR................................................ ................................................................Vice President ARTHUR M. ANDERSON......................................Member Board of Directors and Executive Committee, J. P. Morgan & Co. Incorporated GEORGE I. BRIGDEN............................................................................................Vice President and Treasurer H. DeWITT SMITH ................................................................................. Consulting Engineer, New York, N. Y. FRANCIS CAMERON............................................................................ ...................................... Vice President BERNARD F. DESLOGE............................................................................................................St. Louis, Missouri ELI WHITNEY DEBEVOISE.................................................Debevoise, Plimpton & McLean, New York, N. Y. JAMES W. McAFEE...........................President, Union Electric Company of Missouri, St. Louis, Missouri .DAVID R. CALHOUN...................................................... President, St Louis Union Trust Company 'Resigned February 10,1958 and replaced by Charles R. I nee, Vice President 1911 1913 1921 1928 1933 1944 1945 1948 1953 1953 1954 1954 1957 ANDREW FLETCHER . . C. MERRILL CHAPIN, JR.. FRANCIS CAMERON . . GEORGE 1. BRIGDEN . . FELIX EDGAR WORMSER . CHARLES R. INCE . . . R. J. MECHIN . . . . ROBERT H. RAMSEY . . JAMES G. COLVIN . . . DONOLD K. LOURIE . . WILLIAM J. ELLIOTT . . EDWARD P. MERRELL . Executive Officers . ................................ President . . . . . . Vice President ............................... Vice President H . Vice President and Treasurer ................................Vice President Vice President and Sales Manager ................................ Vice President ..................... Asst. Vice President , Comptroller and Asst. Treasurer ..................................... Secretary ...............................Asst. Secretary .............................. Asst. Treasurer United States Division Managers MINES SMELTERS ELMER A. JONES Southeast Missouri JOHN G. WEHN Josephtown, Pennsylvania MARSHALL G. JONES Edwards-Balmat, N. Y. WILLIAM T. ISBELL Herculaneum, Missouri Consultant GEORGE F. WEATON Cia. Minera Aguilar, S. A. Argentina DONALD B. McGILVRA...................................... ............................... Vice President 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HIGHLIGHTS 1957 Sales of metals, etc...................... ..... . . $106,869,864 Taxes on income.................................... . $4,001,842 Net income (after taxes)..................... . $8,026,273 Dividends paid.................................... . $5,432,486 Shares of capital stock outstanding . . . 2,716,222 1956 $119,909,612 $5,280,519 $10,291,357 $8,148,666 2,716,222 Per share on capital stock: Taxes on income............................... . Net income. . . .......................... . Dividends.................................... ..... . Current assets.......................... . . Current liabilities ....... . Net current assets . . . ... .. . . . Long term debt............................... . . Cash.................................................... . Short term marketable securities. . . . Capital expenditures ...... . Number of employees . . . .! . . . Number of stockholders..................... . $1.47 $2.95 $2.00 $42,707,719 $ 9,148,775 $33,558,944 $8,500,000 $5,433,389 $8,740,000 $14,929,873 5,076 14,267 $1.94 $3.79 $3.00 $49,726,746 $11,383,335 $38,343,411 -- $6,515,084 $18,000,000 $3,533,984 5,213 13,219 4 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. NINETY-FOURTH ANNUAL REPORT FOR THE YEAR 1957 St. Joseph Lead Company TO THE STOCKHOLDERS: WORLD MARKETS FOR LEAD AND ZINC The stability in price which the lead and zinc mar ket had enjoyed for fifteen months, was abruptly terminated in May of 1957, following the cessation of Government bartering of surplus agricultural commodities for strategic materials. Without this support to absorb the large foreign metal sur pluses, and facing a declining trend in consump tion, the market for both metals immediately re acted to the law of supply and demand. Lead continues to be imported at needlessly high rates with 517,000 tons entering the U, S. in 1957, compared with 460,000 in 1956. The avail able domestic supply of 1,341,000 tons in 1957 was therefore over two hundred thousand tons in excess of the 1,122,000 tons consumed. More over, in the case of zinc, the surplus was 355,000 tons, because of the record high imports of 792.000 tons. The domestic zinc consumption of 934.000 in 1957 was only slightly less than the 1956 record consumption of 1,018,000 tons. The St. Joseph Lead Company believes that it is to the benefit of the United States to stem the unparalleled flood of unneeded imports which has brought distress to mining communities and threatens to impair the further development of our latent mineral resources. Although there has been a slight improvement in the London Metal Ex change, lead is still selling at around 9 cents per pound and zinc at 8 cents, in comparison with present U. S. prices of 13 and 10 cents a pound. To maintain a prosperous domestic mining indus try, the Administration in its proposed 1957 legis lation, suggested that "peril points" of 17 cents for lead and 14.5 cents for zinc were desirable, above which no duty or import tax would be pay able. As both metals can be produced more cheaply outside the United States than inside, it is hoped that the Tariff Commission and Congress will at long last take the necessary constructive steps to protect the domestic mining industry from ex cessive imports. EARNINGS The net earnings of St. Joseph Lead Company and Consolidated Subsidiaries for the year 1957 as i^shown on Page 15 were $8,026,273, which is equivalent to $2.95 per share on the 2,716,222 shares of capital stock outstanding. This compares with $10,291,357 and $3.79 per share on a similar number of shares in 1956. The most important reason for the lower earnings was the decrease in the prices of lead and zinc, although a drop of 16,200 tons in pig lead sales was a contributing factor. Slab zinc sales were approximately 2,800 tons higher than in the previous year. The price of lead which had remained at 160 per pound throughout the entire year 1956, dropped to 15V20 on May 9, 1957, to 150 on May 16th, and an addi tional 2p in three subsequent drops, until Decem ber 2nd when it reached 13p, where it remained at year end. Zinc followed more or less the same pattern, the price being 13V20 per pound during the previous year, dropped to 120 on May 6,1957, and an additional 20 in four subsequent decreases until it reached 100 on July 1, 1957. The 1957 earnings were materially improved by the increase in dividends received from Cia. Minera Aguilar, S.A. and other foreign affiliates which amounted to $1,782,169 in 1957, as compared with $756,878 in 1956. Approximately 58% of the gross earnings of the Company came from zinc, and 42% from lead, 5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. in comparison with 47% for zinc and 53% for lead in 1956. The earnings per share by quarters were as fQffOWS: 1957 1956 First Quarter. . . . $1.01 Second Quarter . . . 1.11 Third Quarter. ... .52 Fourth Quarter ... .31 Total . . . . . $2.95 $1.08 .78 .85 1.08 $3.79 Comparative earnings for each of the last ten years are shown in the table below: TEN YEAR EARNINGS 1948 -- 1957 Year Consolidated Net Income After Income Taxes of 1948.... 1949.... 1950. . . . 1951.... 1952.... 1953.... 1954. . . . 1955. . . . 1956. . . . 1957. . . . $ 9,636,737 8,564,436 12,211,615 13,577,237 9,638,455 6,300,342 7,523,503 12,729,820 10,291,357 8,026,273 $ 3,776,836 2,889,925 7,976,468 13,819,817 5,667,894 4,344,733 4,628,764 6,478,177 5,280,519 4,001,842 SALES The total sales in 1957 amounted to $106,8^9,864, which is 11% lower than the comparable figure of $119,909,612 for 1956. Lead sales from St. Joe's production were lower and amounted to 121,550 tons as compared with 137,772 tons in 1956. Sales of zinc content in slab zinc and zinc oxide were slightly higher than in 1956, and amounted to 135,499 tons as compared with 132,652 tons. The table on Page 14 shows the tonnage of lead and zinc production, purchases and sales for the ten-year period ended December 31, 1957. DIVIDENDS Cash dividends of $2.00 per share were paid during the year consisting of 75 per share on March 8th, 50^ on June 10th, and 371/2^ each on September 10th and December 10th. Cash dividends of $3.00 per share were paid during 6 1956 in four quarterly payments of 75^ per share each. The following is a record of the cash divi dend payments for the ten-year period through 1957: DIVIDENDS 1948 -- 1957 Year *Per Share Amount 1948.... 1949.... 1950.... 1951.... 1952.... 1953.... 1954.... 1955.... 1956. . . . 1957.... $2.36 2.36 2.36 2.95 2.88 2.75 2.00 3.00 3.00 2.00 $6,420,232 6,420,232 6,420,232 8,023,749 7,776,373 7,468,290 5,432,076 8,148,666 8,148,666 5,432,486 *On the basis of 2,716,222 outstanding shares, which gives effect to 25% December 11, 1950 and 10% stock dividend paid June 10, 1952. TAXES ON INCOME The provision for Federal and State taxes on in come was $4,001,842 which is equivalent to $1.47 per share, as compared with $5,280,519 or $1.94 per share for the previous year. The Federal income and excess-profits tax re turns of the Company have been audited by the Internal Revenue Service through the year 1954, As the result of their audit, the Company has an unpaid liability of $247,000 for expenses dis allowed which is being contested. In the last Annual Report, stockholders were advised that the Company had filed suit against the U. S. Government to obtain a refund of the taxes paid on percentage depletion disallowed on the sales of lead produced from remilled tailings during the years 1949 to 1953 inclusive. The total amount involved is approximately $712,000, ex clusive of interest. The claims have not been set up on the Company's books. The suit is still pend ing, and the Government has requested suspen sion of further proceedings in order that it may be determined whether and to what extent an administrative refund should be made in the light of recent Treasury decisions. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. FINANCING FOR 100,000 K.W. JOSEPHTOWN POWER PLANT In the 1956 Annual Report the stockholders were advised that arrangements had been made with the Pittsburgh Consolidation Coal Company to borrow $8,500,000 on the Company's 3%% Notes, at the rate of $2,000,000 per month beginning July 1, 1957. This borrowing was consummated on November 1, 1957. The Notes are to be repaid in twenty semi-annual instalments, the first pay ment to commence not later than eighteen months after the completion of the power plant, to be known as the George F. Weaton Station. As it is estimated that the power plant will be completed on or about July 1, 1958, the first semi-annual instalment of $425,000 will be due January 1, 1960. WORKING CAPITAL As of December 31, 1957 current assets were $42,707,719 and the current liabilities $9,148,775; thus the Company had $4.67 of cur rent assets for each dollar of current liabilities at the close of the current year. The net working capi tal (cash resources, receivables and inventories, minus current liabilities) was $33,558,944 at December 31, 1957, a decrease of $4,784,467. A summary of the principal items responsible for the changes during 1957 is as follows: Sources of Increase; Net Income ....... $ 8,026,273 Long Term Notes Payable . . . 8,500,000 Depletion, Depreciation and Abandonments ..... 2,935,632 Decrease in Deferred Charges,etc. 210,457 Total............................. $19,672,362 Decreases due to: Cash Dividend Paid..................... $ 5,432,486 Capital Expenditures .... 14,929,873 Investment in Brunswick Mining & Smelting Corporation Ltd. 5% Income Bonds .... 2,125,000 Other Investments and Advances 1,969,470 Total............................. $24,456329 Net Decrease in Working Capital During 1957 ...........................$ 4,784,467 CAPITAL EXPENDITURES Expenditures for fixed capital additions in 1957 totaled $14,929,873 as compared with $3,533,984 in the previous year. Of this amount $11,803,420 covered expenditures for construc tion of the new 100,000 K.W. Power Plant at Josephtown, Pennsylvania, and $2,185,953 repre- Year 1948 . . . 1949 . . . 1950 . . . 1951 . . . 1952 . . . 1953 . . . 1954 . . . 1955 . . . 1956 . . . 1957 . . . COMPARATIVE CAPITAL EXPENDITURES Lead Belt $ 469,093 774,658 903,776 2,549,327 3,793,336 3,972,871 817,306 458,947 723,865 467,997 JU5C fJillUWH Zinc Plant Power Plant $1,776,183 147,536 177,071 564,768 1,768,048 720,665 208,499 1,769,847 2,171,031 2,185,953 -- -- -- --' -- -- -- -- $ 633,088 11,803,420 Oil and Gas Edwards-Balmat Leases $ 81,590 160,553 929,617 685,128 -- -- -- -- 90,896 -- 94,475 $ 92,804 99,938 -- 1,445 6,000 6,776 -- 233,000 239,503 Total $ 2,326,866 1,082,747 2,010,464 3,799,223 5,652,340 4,880,815 1,125,743 2,237,015 3,533,984 14,929,873 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. sented the cost of increasing the slab zinc produc tion capacity from 10,000 to 12,000 tons per month at the Josephtown Zinc Smelter. Construction of the Power Plant is progressing on schedule and it is expected that the first unit will be placed in operation around May 15, 1958, and the second unit a month later. It is estimated that about $7,600,000 will be expended on the Power Plant in 1958 and that capital additions for the other divisions will approximate $500,000, ex clusive of expenditures at Viburnum and Pea Ridge which are separately commented upon in this Report. Capital expenditures since 1948 are shown in the table on Page 7. DEFERRED PROFIT SHARING PLAN Under the Deferred Profit Sharing Plan for Sal aried Employees, which was established as of January 1, 1956, contributions by the Company are 3% of the consolidated net income, or 10% of the aggregate salaries of the eligible employees, whichever is less. However, no contribution shall be made which would result in the consolidated net income after such contribution being less than $2.00 per share. For the year 1957 the Company's contribution amounted to $240,788 representing 3% of the consolidated net income. This is equal to 4.83% of the aggregate yearly salaries of the 685 employees entitled to participate under the Plan; 652 elected to have their shares invested in the St Joe Stock Fund which holds only St. Joe stock. SOUTHEAST MISSOURI The mines and mills of the Lead Belt were again operated without interruption throughout the year. Ore and chat milled were slightly in excess of the" previous year and totaled 7,301,266 tons as com pared with 7,195,413 tons in 1956. The 'ead con tent on a 90% basis, of the ore and chat milled also showed a slight increase from 100,707 tons to 103,502 tons. Zinc recovered in 1957 was 2,716 tons as compared with 3,152 tons in the previous year. A 6,000 ton curtailment measure, neces- 8 sitated by continued increase in inventories, was placed in effect March 10, 1958. Pig lead production at the Herculaneum Smelter was practically the same as in the previ ous year and amounted to 98,473 tons in com parison with 98,380 tons in 1956. The slab zinc produced at this plant from blast furnace slag was 2,062 tons and 2,856 tons for 1957 and 1956 respectively. Production was reduced from a twofurnace to a one-furnace basis on March 1,1958. The slag furnace will not be operated until the demand for zinc improves. EDWARDS-BALMAT, NEW YORK The mines and mills at this division operated con tinuously throughout the year. Zinc concentrate production again reached a record high of 117,513 dry tons and lead concentrates totaled 1,951 tons compared with 107,653 tons and 2,791 tons re spectively in 1956. As in previous years, ail zinc concentrates produced were shipped to the Josephtown Smelter and the lead concentrates to the Herculaneum Smelter. Operations at this divi sion were reduced by approximately 20% on Feb ruary 3,1958. JOSEPHTOWN, PENNSYLVANIA The Josephtown Smelter again operated on a full time basis throughout 1957, and zinc content of oxide and metal produced reached an all-time high of 149,492 tons as compared with 134,023 tons for the previous year. On January 1, 1958 the slab zinc production at this smelter was reduced from the December rate of slightly over 12,000 tons per month to 9,500 tons per month, and on March 1st was further reduced to approximately 8,000 tons per month. LABOR RELATIONS Labor relations throughout the year were harmoni ous and there were no work stoppages. The total number of employees at the end of 1957 was 5,076 compared with 5,213 at the end of 1956. At December 31, 1957 approximately Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 65% of our employees had over 10 years of service and about 17% had been employees for more than 25 years. Compensation to all employees totaled $27,832,266 in 1957 compared with $25,682,126 in 1956. The Company also paid for employee benefits such as retirement annuities, Group Life insurance and hospitalization. PROGRESS IN NEW AREAS Viburnum Project--Drilling on the three lead prospects in the Viburnum area located in Wash ington, Crawford and Iron Counties, Missouri, which began in the spring of 1957 continues to expand the encouraging picture. A total of 276 diamond holes were drilled in 1957, and of this number 180 were in conjunction with Defense Minerals Exploration Administration. As of Decem ber 31, 1957, the Company was contingently liable to this governmental agency for the repay ment of advances in the amount of $154,379 in connection with the exploration contracts. These advances represent one-half the cost of certain drilling in the area and are to be repaid without interest, from the income when the properties are placed in production, at the rate of 5% of the gross value of the ore mined. Expenditures in this area totaled $692,739 for the year, of which $439,194 was for land purchase and prospecting, and $253,645 was spent in preparation and equipment for the new No. 27 Shaft. It is estimated that ap proximately $1,450,000 will be spent on this project during 1958. ... Pea Ridge Project--The Meramec Mining Com pany was incorporated on June 20, 1957 in Mis souri to exploit the Pea Ridge iron ore deposit located about forty miles northwest of Bonne Terre, Missouri. This company is owned jointly by Bethlehem Steel and ourselves. St. Joe is to take the major responsibility of operating the mine. Upon request, Bethlehem will loan us on our 4V2% Notes, 80% of St. Joe's half of the expendi tures necessary to place the property in operation. It is estimated that the cost for an installed capac ity of 2 million tons of finished product will ap proximate 30 million dollars. The construction and mine preparation necessary for such a large-scale enterprise will take about five years. During 1957, Bethlehem and St. Joe each ad vanced a total of $661,573 to Meramec Mining Company. Of this amount, $285,594 of shaft sink ing and development costs was written off against current St. Joe income, and the balance, $375,979 was set up as an investment in Meramec Mining Company. Under the program for 1958, it is esti mated that expenditures for the year will total $1,470,000 ($735,000 each by Bethlehem and St. Joe). Santander, Peru--In accordance with an agree ment with the Santander Mining Company of Dela ware, in September, 1956, certain lead-zinc mining claims in Peru were turned over to a new com pany incorporated in Delaware on January 7,1957, named Compania Minerales Santander, Inc., in exchange for 40% of its authorized stock. At De cember 31, 1957 St. Joseph Lead Company had acquired a 60% interest in the new company and had advanced a total of $1,165,000 on the project. Under a supplemental contract with Santander Mining Company, St. Joe agreed to increase its maximum investment from $1,500,000 to $1,700,000 for development and equipping the property and will receive an additional 22% inter est in the company. Construction of the hydro electric power plant and a 500-ton per day mill Will be completed in 1958. North Africa--Societe Nord Africaine du Piomb (NAP) and Societe Algerienne du Zinc (ALZI) both owned 17.15% by St. Joe, have mining operations near the Algerian-Moroccan border, south of Oujda, Morocco. Due to political disturbances in the area, production was suspended during the period December 11, 1956 to February 14, 1957. Since operations were resumed, no further inter ruption has been experienced. During the year St. Joe received $249,890 in dividends from NAP and $262,564 from ALZI, making a total from these two companies of $512,454. The liquidation of Societe de Developpement Minier (SDM) a Moroccan holding company owned 35% by St. Joe and 65% by Newmont Mining Cor- 9 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. poration, was completed in 1957 by the distribu tion of its holdings of Societe des Mines de Zellidja stock (about 1.34% owned), and the stock of Omnium de Valeurs Agricoles Industrielles et Minieres (about 1.38% owned), a French invest ment company holding a portfolio of international securities. The December 31, 1957 market value of the securities received by St Joe is estimated at $437,987; we also received $49,116 in divi dends from SDM during 1957. In 1958 the remain ing 40 million francs owned by SDM will be dis tributed, and our share of these francs when con verted into U. S. dollars, will be approximately $33,000. OIL EXPLORATION During the year five additional producing wells were completed in the Harris Ranch Leases, Crockett County, Texas, owned jointly by Continen tal Oil Co. and ourselves, thereby bringing the total of producing wells on these leases to 20, with one shut-in gas well. It is estimated that our share of the recoverable reserves as of December 31,1957, is 2,548,368 bbls. of oil and 16,818 million cubic feet of gas, which compares with 2,193,539 bbls. and 12,214 million cubic feet of gas at December 31, 1956. The oil royalties received during 1957 totaled $603,704 which compares with $319,933 for the previous year. During the current year expendi tures for exploration and drilling were $378,713, and for gas injection and well equipment, etc., $239,503. In 1956, $621,136 was expended for drilling and exploration. No additional drilling is planned for 1958. CIA. MINERA AGUILAR, SA ' '3 The earnings for the year were the highest in the company's history and amounted to 66,645,892 pesos (which is equivalent at the free rate of ex change to about 1,800,000 U. S. dollars) after setting aside reserves for replacement of machin ery and equipment, etc., of 35,431,700 pesos. These earnings show an increase of 12.9% over the 59,040,989 pesos reported for 1956, after 10 deduction for reserves of 34,830,650 pesos. Dur ing 1957, current dividends converted into U. S. dollars amounted to $1,169,819 which compares with $589,171 the year previous. Mine prospecting and development continues encouraging. The mine is in excellent condition as to staff, reserves and future possibilities, but the economic and political outlook for the near future in Argentina continues disturbing. Sulfacid, S.A.'s successful pilot plant develop ment for an electrolytic zinc smelter was the high light of 1957. However, final decision as to pro ceeding with an 18-metric-ton per day commercial plant will be determined after the immediate poli tical situation in Argentina is clarified. Earnings for this company, which has an installed capacity of 40,000 metric tons of sulphuric acid per year, will be higher than in 1956, but no dividends were declared in order that financing of the new plant can be handled with a minimum of borrowing. The fertilizer output was restricted by economic con ditions. In 1957, $28,553 was received from the conversion of dividends declared in previous years. St. Joe with Aguilar have a 50% ownership in this company. Although plagued by power shortages, Austral, S.A. produced over 8,800 metric tons of zinc, and its operating results were very much better than in the previous year, primarily because of the in stallation of the new Josephtown-type condensers and the continued improvement on the part of the technical staff. Fifty percent of a previously "blocked" dividend was released by the Central Bank and $22,227 was received by St. Joe in De cember, 1957. St. Joe with Aguilar own 43.3% of this company's outstanding capital stock. BRUNSWICK MINING AND SMELTING CORPORATION LIMITED During 1957 St. Joe advanced $2,125,000 to Brunswick Mining and Smelting Corporation Limited on its 5% Income Bonds due in 1968. This brings the total advanced to December 31, 1957 to $5,625,000. Expenditures by Brunswick during the year were about $2,353,000 and covered the following: Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Mining: The No. 2 production shaft was sunk to a depth of approximately 800 feet at the year end. Milling: An intensive program of flotation research was pursued throughout the entire year. Pilot Mill Test No. 27 was successfully completed. This test demonstrated that ore from the north end of the No. 12 orebody could be treated in a production flotation concen trator. Design: A practical flowsheet for the design of a production mill was devised. The General Engineering Company drew up site plans, plant layout comparisons and estimated costs for the construction of a tidewater concentrator and auxiliary buildings. The Canadian National Rail way made a survey of the rail routes from proj ects 6 and 12 to the mill plant site. Roast-Leach: Research work carried out at Josephtown has developed what appears to be an interesting method for the treatment of raw ore or a low-grade concentrate, by a roast-leach procedure which results in excellent recoveries of copper, zinc, lead and iron. Certain problems relating to solution purification have not as yet been solved for a production unit, nor the eco nomics of the process studied. At the Brunswick Board meeting held January 14, 1958, a budget of $447,000 was adopted for the year 1958, which involves a continuation of laboratory work plus shaft sinking through March 31, 1958, and the maintenance of the property thereafter on a "watchman" basis, ANTI-TRUST SUIT In the last four Annual Reports, the stockholders were advised that the United States had com menced a civil action against St. Joseph Lead Company and American Smelting & Refining Com pany in the United States District Court for the Southern District of New York, alleging violations of the Sherman Anti-Trust Act in connection with the lead business of each of the defendants. The stockholders were also advised that the Company vigorously denies that it has in any way violated the antitrust laws and that the Company stated this position in an answer filed to the Govern ment's complaint. On October 11, 1957, American Smelting & Refining Company accepted a Consent Decree in settlement of the case against it. St. Joseph Lead Company, however, has not accepted a decree, and the action is still pending against the Com pany. At the request of the Government, the case has been marked off the trial calendar of the Court, subject to restoration to the calendar on 30 days' notice by either party. At this time it is impossible to predict when the case will go to trial. ORGANIZATION CHANGES Since publication of the Company's 1956 Annual Report, several changes have taken place in the membership of the Board of Trustees and in the officers of the Company.* At the Annual Meeting on May 13, 1957, Mr. Clinton H. Crane who had served the Company as Chairman of the Board of Trustees for ten years, and as President of the Company for thirty-four years, at his request was not re-elected Chairman, but continues as a Trustee. The Board did not elect a Chairman to succeed Mr. Crane. On November 11, 1957, the Board of Trustees accepted with regret the resignation of John R. Shepley as Trustee. Mr. Shepley, a former Vice President of the St. Louis Union Trust Company, had been a member of our Board since 1950, and is retiring from active business. David R. Calhoun, President of the St. Louis Union Trust Company succeeded Mr. Shepley as Trustee on that date. On February 10, 1958, the Board of Trustees accepted with regret the resignation of Hendon Chubb of the firm of Chubb & Sons, New York, who had been a member of our Board since 1928. Mr. Charles R. Ince, Vice President and Sales Manager of St. Joseph Lead Company, succeeded Mr. Chubb as a Trustee. On June 17, 1957, Felix E. Wormser rejoined the Company as a Vice President after having served four years in Washington, D. C. as Assistant Secretary of the Interior for Mineral Resources. At the Organization Meeting of the Board of Trustees following the Annual Meeting on May 13, 1957, Robert H. Ramsey, formerly Secretary of 11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. the Company, was appointed Assistant Vice Presi dent, and Donold K, Lourie, formerly Assistant Secretary, was appointed Secretary of the Company, STOCKHOLDERS The number of stockholders of record since 1948, and a classification of their holdings, are as follows: A TEN-YEAR RECORD OF STOCKHOLDER CLASSIFICATION Year 1948 .... . . . 1949 .... . > . 1950 .... . . . 1951 .... . . . 1952 .... . . . 1953 .... . . , 1954 .... . . . 1955 .... . . . 1956 .... . . . 1957 .... . . . Total 7,823 7,993 8,435 9,023 10,182 10,657 10,497 11,263 13,219 14,267 ' 19 or less 1,834 ` 1,847 1,794 1,907 2,146 2,257 2,165 2,105 2,718 3,082 20-99 3,135 3,123 3,443 3,705 4,235 4,424 4,305 4,830 5,727 6,210 100-199 1,611 1,747 1,943 2,076 2,346 2,485 2,511 2,740 3,243 3,359 200-Over 1,243 1,276 1,255 1,335 1,455 1,491 1,516 1,588 1,531 1,616 PRESIDENT'S REPORT TO EMPLOYEES It is believed that the stockholders will be interested in the 1957 President's Report to Employees which is enclosed under the flap of the rear cover of this report. MINE LA MOTTE CORPORATION The net loss for 1957 for Mine La Motte Corpora tion (50% owned) was $292,520 after charges for shaft sinking and development expenditures of $254,112. The sinking of a shaft in the new orebody is about completed and it is expected that mining operations will start during the first six months of 1958. CONCLUSION In concluding this report, I wish to take this opportunity to express the Management's appre ciation to both our stockholders and our em ployees for their loyal support. New York, March 11, 1958 President 12 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UNITED STATES LEAD AND ZINC STATISTICS Lead Available Supply: U. S. Mine Production.................................................. From scrap ...................... ..... , . . . Imports of concentrates and bullion (Lead content) . Metal imports (net)....................................................... Total Lead Meta! Available............................ Consumption: Batteries............................................ ..... . . . . Ethyl gasoline.................................................................. Cables.............................................................................. Construction . ........................................................ . Pigments........................................................................ Other uses........................................................................ Total Consumption....................................... Surplus................................................................................... 1957 (Est.) 334,000 490,000 192,000 325,000 1,341,000 1956 (Final) 353,000 507,000 197,000 263,000 1,320,000 361,000 170,000 114,000 117,000 116,000 244,000 1,122,000 219,000 371,000 192,000 134,000 125,000 120,000 268,000 1,210,000 110,000 Zinc Available Supply: Recoverable U. S. Mine Production................................. Add--used to make pigments................................. . . Recoverable domestic zinc available to Metal Smelters . Scrap zinc .............................................................................. Imports of concentrates (Recoverable zinc content) . . Imports of slab zinc............................................ ..... . . Total Zinc Metal Available . . . . ...... Consumption: Galvanizing........................................................................ . Zinc Base Alloys.................................................. ..... . . Brass........................................................................ ..... . . Rolled Zinc............................................................................. Oxides................................................................................... Other ........................................................................................ Total Consumption. . . . . . . . . . Exports............................................................. ... . . . Total zinc metal consumed and exported , . . Surplus......................................................................................... 313,000 112,000 425,000 72,000 527,000 265,000 1,289,000 331,000 116,000 447,000 72,000 525,000 245,000 1,289,000 356,000 370,000 110,000 41,000 21,000 25,000 923,000 11,000 934,000 355,000 439,000 360,000 124,000 47,000 19,000 20,000 1,009,000 9,000 1,018,000 271,000 13 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY - LEAD AND ZINC STATISTICS Year 1948 . 1949 . 1950 . 1951 . 1952 . 1953 . 1954 . 1955 . 1956 . 1957 . Lead Lead Pig Lead Concentrates Equivalent Produced of Produced from lead and Company's Concentrates Purchased Mines Purchased Concentrates Pig Lead Production . 126,589 25,453 98,566 93,838 . 156,301 49,580 136,219 131,802 . 169,354 38,951 137,058 141,595 . 158,579 27,792 121,431 112,754 . 157,037 39,726 128,141 128,691 160,625 38,294 129,281 130,430 164,171 39,373 133,932 129,766 162,552 43,100 136,668 138,796 158,861 44,353 136,921 137,429 163,079 46,309 140,617 137,940 Lead Sales St. Joe Smelter Production Purchased Lead Sales 92,536 32,963 121,333 32,596 153,933 58,217 115,873 32,032 125,718 34,907 122,062 45,130 123,273 59,806 155,755 56,345 137,772 61,522 121,550 62,392 Year 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 Zinc Concentrates Produced from Company's Mines Zinc Concentrates Purchased Zinc . ' ` '! Slab Zinc Equivalent of Produced and Purchased Concentrates Slab Zinc Equivalent of Smelter Production . . . 66,697 78,170 71,781 76,051 . . . 70,952 81,946 79,769 86,314 . . . 75,290 72,444 75,238 98,443 . . . 82,217 47,659 71,077 99,602 . . . 69,173 103,769 98,680 108,959 . . . 104,744 112,991 126,968 121,592 . . . 109,547 61,640 105,610 111,021 . . . 109,303 111,868 134,012 138,201 . . . 114,138 126,164 146,897 136,879 . . . 123,417 105,604 144,011 151,554 Zinc Content of Oxide and Metal Sales from Smelter Production Purchased Zinc Sales Sulphuric Acid Sales 75,977 40,755 129,068 71,116 41,702 124,621 94,028 59,198 157,036 89,047 54,540 156,861 89,414 45,528 162,712 103,009 49,513 174,715 117,611 49,931 147,076 136,723 65,822 183,609 132,652 48,672 190,004 135,499 56,613 204,255 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND CONSOLIDATED SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME For the Years Ended December 31,1957 and 1956 Net Sales of Metals, Metal Products, Etc....................... Cost of Sales, Etc,--Exclusive of items deducted below Other Income: Dividends: Compania Minera Aguilar, S. A.................................................... Other --domestic and foreign.................................................... Income from oil royalties..................................................................... Other income less charges .... .......................................... Total .................................................................................................................... Deduct: Selling, general and administrative expenses . . . . . . . . Exploration: New mine examination and development expenses . . . . Oil exploration and drilling expenses.......................................... Past service annuities (Note 5)............................................................... Depreciation (including abandonments in 1957) . . . . . . . Depletion..................................................... 1 . . . . . . Interest on long-term debt..................... ..... . . .... . . Total deductions.......................................... ..... . . . . Net Income Before Taxes on Income.......................................................... Provision for Taxes on Income: Federal income taxes..................................... ..... State income taxes..................................... ..... Total taxes on income ....... .. . . . . Net Income for the Year............................................................................... Earned Per Share on the 2,716,222 Shares Outstanding.......................... 1957 $106,869,864 91,664,115 $ 15,205,749 1,169,819 873,060 603,704 639,177 $ 18,491,509 $ 2,119,410 561,676 378,713 349,130 2,701,217 234,415 118,833 $ 6,463,394 $ 12,028,115 $ 3,884,706 117,136 4,001,842 $ 8,026,273 $2.95 1956 $119,909,612 100,284,356 $ 19,625,256 589,171 476,662 319,933 284,534 $ 21,295,556 $ 1,937,453 166,740 621,136 349,130 2,394,049 255,172 -- $ 5,723,680 $ 15,571,876 $ 5,194,085 86,434 5,280,519 $ 10,291,357 $3.79 STATEMENT OF CONSOLIDATED EARNED SURPLUS For the Years Ended December 31,1957 and 1956 Earned Surplus at Beginning of the Year.......................... .................................... Net Income for the Year.................................................... .................................... * Cash Dividends Paid During the Year (1957, $2 per share; 1956, $3 per share). . Earned Surplus at End of the Year..................................... .................................... 1957 $ 26,334,179 8,026,273 $ 34,360,452 5,432,486 $ 28,927,966 1956 $ 24,191,488 10,291,357 $ 34,482,845 8,148,666 $ 26,334,179 The accompanying notes to financial statements are an integral part of the above statements. 15 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND CONSOLIDATED SUBSIDIARIES ASSETS. CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1957 AND 1956 December 31,1957 December 31,1956 Current Assets; Cash..................................................................... - , . U. S, Government, State, and Municipal short-term securities..................................................................... Accounts receivable--trade................................ . U. S. Government--claims for income tax refunds . . Other accounts receivable (including advances to affiliates)..................................................................... Inventories (valuation not in excess of market)-- (Note 1): Finished lead, zinc, etc............................................. Lead, zinc, etc., m process and concentrates . . Materials and supplies.......................................... Investments: Compama Min era Aguilar, S. A. (at nominal valuation --99.9% owned, not consolidated)--(Note 2). . . Mine La Motte Corporation (at nominal valuation-- 50% owned)--(Note 3)..................................... ..... The New Jersey Zinc Company (at cost, less non-taxable dividends, 100,000 shares--5.1% owned) . . Brunswick Mining and Smelting Corporation Limited (at cost)--(Note 6): 1,600,000 shares--40% owned.......................... 5% income bonds, due July 1,1968..................... Compania MmeraJes Santander Inc.--Investments and advances (at cost--60% owned)................................ Meramec Mining Company--Investments and advances (at cost--50% owned)................................ Sundry securities, loans, etc. (at cost, less reserve, $200,000)........................................... .... . Capital Assets (Note 4): Mining properties and mineral rights: Appraised value as of March 1,1913 and appreciation from subsequent revaluation . . Less allowance for depletion................................ Additions subsequent to March 1,1913 (at cost) . Less allowance for depletion................................ Land, buildings, plant and equipment (at cost). . , Less allowance for depreciation.......................... Power plant--under construction................................ Total capital assets, net................................ $ 5,433,389 8,740,000 7,364,867 480,201 657,717 8,480,703 4,999,026 6,551,816 $1 1 5,724,028 2,339,758 5.625.000 1.165.000 375,979 848,800 $17,000,000 17,000,000 $22,326,393 19,986,953 $52,0757683' 35,151,075 $42,707,719 16,078,567 2,339,440 16,924,608 12,436,509 '$31,760,557 $ 6,515,084 18,000,000 10,049,388 380,765 671,325 2,425,706 5,092,910 6,591,568 $49,726,746 $1 1 5,724,028 2,339,758 3,500,000 420,309 11,984,097 $17,000,000 17,000,000 $22,067,818 19,752,538 $49,949,607 33,229,179 2,315,280 16,720,428 633,088 $19,668,796 Miscellaneous Assets: U. S. Government, State, and Municipal securities on deposit with State departments (at amortized cost) Cash and marketable securities (at amortized cost)-- Fire insurance fund (see contra) . . . . . , $ 836,184 : 229,054 1,065,238 $ 836,589 234,439 1,071,028 Deferred Charges: Oil and natural gas expenditures in suspense . . . Deferred past service annuities (Note 5)..................... Deferred exploration expenses..................................... Other deferred charges .... .... Total................................................................ $ 195,745 1,488,477 778,170 __ _ 313,222 __ 2,775,614 $94,327,695 $ 120,636 1,837,607 598,578 __ 312,740 2,869,561 $85,320,228 The accompanying notes to financial statements are an integral part of the above balance sheets. 16 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1957 AND 1956 Current Liabilities: Accounts payable......................................................... Wages payable.............................................................. Interest accrued on long-term debt.......................... Accrued taxes: Federal income (Note 7).................................... ..... Other ......................................................................... Long Term Notes: 3%% notes due in semi-annual installments of $425,000 each, commencing January 1, 1960 . . Deferred Federal Income Taxes--related to accelerated amortization of emergency facilities.......................... Reserves: Injury claims and workmen's liability insurance . Employees' life insurance and retirement . . . Fire insurance (see contra)............................... ..... . . . Stockholders' Equity: Capital Stock, par value $10 per share: Authorized 5,000,000 shares Outstanding--2,716,222.5 shares (after deducting 21,414.35 shares in treasury)............................... Surplus: Earned .................................................................... Capital.......................................... . Total Stockholders' Equity.......................... December 31,1957 $ 5,790,821 544,426 118,833 2,451,115 243,580 $ 9,148,775 $ 581,730 399,207 229,054 8,500,000 1,222,247 1,209,991 27,162,225 $28,927,966 18,156,491 47,084,457 $74,246,682 LIABILITIES December 31,1956 $ 6,351,793 467,411 4,248,591 315,540 $11,383,335 $ 603,951 399,576 234,439 1,046,032 1,237,966 27,162,225 $26,334,179 18,156,491 44,490,670 $71,652,895 Total......................................................... $94,327,695 $85,320,228 The accompanying notes to financial statements are an integral part of the above balance sheets. 17 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Sf. JOSEPH LIAO COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS 1. Inventories of lead, zinc, etc. (finished, in process, and concentrates) are valued at cost determined substantially on last-in, first-out (LIFO) method, exclusive of depreciation and depletion. Materials and supplies are valued at average cost. 2. The remittances of dividends of corporations in Argentina made available to stockholders prior to June 30, 1955 are subject to certain restrictions. It is the practice of the Company to record divi dends received or receivable from Compania Minera Aguilar, S. A. and associated companies as they are converted into U. S. dollars. Accordingly, the financial statements of St. Joseph Lead Company and consolidated subsidiaries do not include such dividends not so converted as follows: In bank in Argentina................................................................................. Invested: Compania Meta lurgica Austra l-Argentma, S. A. Comercial--Capital stock (40.5% owned)...................................................................... Sulfacid, S. A. Industrial--Capital stock (27.1% owned) .... Due from Compania Minera Aguilar, S. A. -- Dividends declared not paid, less Argentine income tax withheld--1957, 4,273,898 pesos; 1956, 4,514,160 pesos .... ; " . . . . T; . . . . Total...................................................... ..... Argentine paper pesos December 31 1957 1956 3,191,126 5,423,857 9,720,000 8,240,000 43,641,946 64,793,072 9,720,000 8,240,000 47,357,857 70,741,714 St. Joseph Lead Company together with Compania Minera Aguilar, S. A. own 43.3% of Compania Meta* lurgica Austra(-Argentina, S. A. Comercial and 50% of Sulfacid, S. A. Industrial. Financial statements of Compania Minera Aguilar, S. A. are included herein on pages 20-22. 3. The Company's equity in the net assets of Mine La Motte Corporation, as shown by audited financial statements, was $443,468 and $589,728 at December 31, 1957 and 1956, respectively. Its share of the net loss for the year 1957 was $146,260 as compared with its share of the net income for the previous year of $77,847. M 4. The net value of the capital assets as shown in the consolidated balance sheets does not indicate the present value of the companies' property, plant and equipment, as such value could be arrived at only by current estimates which would vary from time to time depending on the price of metals, rate of production, cost of labor, and other factors. 5. The Company and its domestic subsidiaries have a Retirement Plan for Salaried Employees and a Pension Plan for Payroll Employees, covered either by a contract with an insurance company or by funds deposited with a Trustee, no part of which is reflected in the accompanying consolidated balance sheets. Both plans are non-contributory and all past service costs have been funded. The deferred past service cost is being amortized over a 10-year period. Current annual costs of both the Retirement Plan and the Pension Plan aggregated approximately $800,000 and $593,000 in 1957 and 1956, respectively. 6. Leadridge Mining Company Limited, a wholly-owned subsidiary, is committed to loan Brunswick Mining and Smelting Corporation Limited, a 40% owned comoanv, up to $/,500,000 (uanadian funds) as needed for development and equipment. St. Joseph Lead Company has agreed to make $7,500,000 (U, S. funds) available to Leadridge for this purpose. The loan may be subordinated to other indebtedness of Brunswick not to exceed $17,500,000 (Canadian funds) on terms and condi tions satisfactory to Leadridge. At December 31, 1957 Leadridge held $5,625,000 of Brunswick's 5% income bonds purchased under the commitment. 7. Reference is made to the text of this report relative to the companies' taxes on income, financing- power plant, capital expenditures, deferred profit sharing plan, Viburnum project, Pea Ridge project (Meramec Mining Company) and anti-trust suit. ..... 18 Reproduced with permission of the copyright owner, Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 67 BROAD STREET NEW YORK ACCOUNTANTS' CERTIFICATE To the Stockholders of St. Joseph Lead Company: We have examined the consolidated balance sheet of St Joseph Lead Company and its consolidated subsidiaries as of December 31, 1957 and the related statements of consolidated income and earned surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying consolidated balance sheet and state ments of consolidated income and earned surplus, with the notes to financial statements, present fairly the financial position of St. Joseph Lead Company and its consolidated subsidiaries at December 31,1957 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. February 21, 1958. HASKINS & SELLS ; '; 19 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA M 1NERA A G U 8 L A El r 5. A BALANCE SHEETS, DECEMBER 31, 1957 AND 1956 ASSETS. Current Assets: Cash . .......................................................................... Marketable securities: Argentine Government (at cost).......................... Other (at cost, less reserve --1957, 19,493,471; 1956, 3,213,871)................................................ Accounts receivable--trade (less reserve--1957 and 1956, 4,111,400)..................................................... Due from partly-owned company--trade..................... Other accounts receivable, etc..................................... Inventories: Lead and zinc concentrates (at average cost, or less, exclusive of depreciation and depletionvaluation not in excess of market) .... Materials and supplies (at average cost or less) . December 31,1957 Argentine paper pesos (Note 1) 56,442,277 67,660,694 95,879,601 29,995,086 9,123,078 17,838,102 71,876,642 72,258,074 421,073,554 Investments (Note 2): Sulfacid, S. A. Industrial (at cost--22.9% owned). . Compania Metalurgica Austral-Argentina, S. A. Comer- ciai (at cost--2.8% owned)..................................... 7,825,000 673,000 8,498,000 Capital Assets (Notes 3 and 4): Mining properties and mineral rights: Cost, including exploration and development prior................... to the commencement of operations .... 4,396,077 Less allowance for depletion......................... 3,502,941 Appreciation arising from valuation in 1935 . . Less allowance for depletion......................... Total mining properties and mineral rights, net.......................................... Land, buildings, plant and equipment (at cost) . . Less allowance fordepreciation..................... 49,446,736 39,700,779 82,807,017 28,736,073 Total capital assets, net..................... 893,136 9,745,957 10,639,093 54,070,944 64,710,037 Deferred Charges.................................................... 2,033,988 December 31,1956 Argentine paper pesos (Note 1) 40,112,969 68,346,915 101,426,619 23,153,263 12,123,470 5,333,351 52,648,580 49,843,083 352,988,250 7,824,375 673,000 8,497,375 4,396,077 3,502,941 49^446,736 39,700,779 67,859,003 22,816,590 893,136 9,745,957 10,639,093 45,042,413 55,681,506 1,633,846 Total 496,315,579 418,800,977 Notes; (1) At December 31, 1957 and 1956, the quoted free rate of exchange for a peso was approximately 2.7 cents. (2) The Company together with St. Joseph Lead Company own 50% of Sulfacid, 3. A. industrial and 43.3% of Compania Metalurgica Austral-Argentina, S. A. Comerciai. (3) The net value of the capital assets as shown in the above balance sheets does not indicate the present value of the Company's property, plant and equipment, as such value could be arrived at only by current estimates which would vary from time to time depending on the price of metals, rate of production, cost of labor, and other factors. (4) Ore reserves have been estimated by the directors to exceed appreciably those indicated by former surveys. Had depletion been provided for units sold in each of the years 1957 and 1956 based on the average book values of ore reserves and the quantities of ores on hand and remaining in the properties as so estimated the amounts would have been approximately Argentine paper pesos 390,000 for each year and net income for both years would have been corre spondingly less. However, no depletion has been provided since 1950, as the amounts thereof were not considered to 20 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINERA AGUILAR, S. A. BALANCE SHEETS, DECEMBER 31, 1957 AND 1956 LIABILITIES Current Liabilities: Accounts payable --trade..................................... . Due to St Joseph Lead Company (including dividends payable--1957, 43,641,946; 1956, 47,357,857 . Due to partly-owned company..................................... Wages payable............................................................... Accrued Argentine income and other taxes . . . Other accounts payable............................................... December 31,1957 Argentine paper pesos (Note 1) 8,011,489 44,569,876 7,759,326 2,556,479 50,217,263 2,696,884 115,811,317 December 31,1956 Argentine paper pesos (Note 1) 8,213,242 49,523,719 3,580,930 2,074,023 36,852,227 1,744,275 101,988,416 Deferred Credits--Unearned interest, etc. 1,093 23,324 Reserves: Replacement of capital assets (Note 4)...................... Employees' compensation under Argentine social laws Accidents.................................................................... Other ............................................................................... 150,542,650 15,523,421 10,583,939 16,730,500 f' 193,380,510 115,110,950 14,375,332 8,239,189 14,876,999 152,602,470 Stockholders' Equity: Capital Stock--Nominal value of 80 Argentine paper 1957 Authorized . . . 2,500,000 1956 2,500,000 Issued .... Less in Treasury Outstanding . 1,375,000 96,250 1,278,750 1,000,000 70,000 930,000 110,000,000 7,700,000 102,300,000 80,000,000 5,600,000 74,400,000 Surplus: Capital surplus arising from 1935 valuation of ore reserves (remainder after transfer of pesos 48,000,000 to stated value of capital stock). . Earned surplus: Appropriated: For acquisition of capital stock held in treasury.......................................................... Statutory reserve................................................ Unappropriated (after charging deficits aggre gating pesos 6,395,000 against capital sur plus arising from reduction in stated value of capital stock--Note 5} ...... . Total Stockholders' Equity Total.......................... 1,446,736 7,700,000 5,093,535 70,582,388 83,375,923 187,122,659 496,315,579 1,446,736 5,600,000 3,906,215 78,833,816 -ti'3,340,031 164,186,767 418,800,977 Notes Continued: be material. A special appropriation of 35,431,700 Argentine paper pesos for replacement of capital assets has been made out of income for the year 1957. Similar special appropriations were made out of income in the preceding six years aggregating 115,110,950 Argentine paper pesos. (5) The net profit since beginning of operations, pesos 312,782,423 (earned surplus at December 31, 1957 pesos 83,375,923 plus dividends declared pesos 235,801,500 and less aggregate deficits transferred to capital surplus pesos 6,395,000) represents aggregate net profit pesos 503,025,852 (after deducting depletion computed on cost) against which has been charged depletion computed on appreciation aggregating pesos 39,700,779, and special appropriations for replacement of capital assets aggregating pesos 150,542,650. (6) In accordance with standard practice in Argentina, stock dividends received have been credited to income at par. Amounts so credited during the years ended December 31, 1957 and 1956 totaled approximately pesos 5,500,000 and 6,400,000, respectively. (7) Under a contract for the purchase of a mine hoist, the Company is contingently liable to make payments aggre gating approximately U.S. $209,500 which, at the free rate of exchange prevailing at December 31, 1957, was equivalent to approximately 7,750,000 Argentine paper pesos. 21 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINER A AGUILAR, S. A STATEMENT OF INCOME For the Years Ended December 31,1957 and 1956 Net Sales of Lead and Zinc Concentrates, Etc................................................. Cost Thereof--exclusive of items deducted below..................................... Other income: Dividends (including dividends from partly-owned companies--1957, 939,000; 1956, 1,154,062)--(Note 3)................................................ Interest (including interest from partly-owned companies--1957, 230,821; 1956, 108,055)........................................................... ..... . Other, less charges...................................... ..... Total...................................................... ..... 1957 Argentine paper pesos (Note 1) 269,751,194 82,128,886 187,622,308 7,681,862 1,977,032 1,669,358 198,950,560 Deduct: Selling, general and administrative expenses................................ ..... Taxes, other than taxes on income........................................................... Adjustment of book value of marketable securities to lower of cost or market................................................ ..... .......................................... Depreciation (Note 2)........................... ..... v ... . . . . . Total Deductions........................... : . ........................... Net Income Before Taxes on Income...................................... 6,656,413 1,846,585 16,279,600 6,027,709 30,810,307 168,140,253 Provision for Argentine Income and Extraordinary Profits Taxes . . . . Net income for the Year before Special Appropriation for Replacement of Capital Assets...................................................... . ;.... y . 66,062,661 102,077,592 Special Appropriation for Replacement of Capital Assets (Note 2). . . . Net Income for the Year (after special appropriation). . ........................... 35,431,700 66,645,892 STATEMENT OF UNAPPROPRIATED EARNED SURPLUS For the Years Ended December 31,1957 and 1956 1957 Argentine paper pesos (Note 1) Surplus at Beginning of the Year...................................... ..... ... . Add--Net Income for the Year (after special appropriation) . . . . . 78,833,816 66,645,892 Total........................................................................................... 145,479,708 Deduct: Dividends declared or paid during the year: Cash...................................................... ..... ... Capital stock........................................... ...... . , . . . Appropriations: For acquisition of capital stock held in treasury . . . . . Statutory reserve ......................................................................... ...... . . 43,710,000 27,900,000 2,100,000 1,187,320 Total Deductions............................................... ...... 74,897,320 Surplus at End of the Year (after charging deficits aggregating pesos 6,395,000 against capital surplus)............................................... ...... . . ,5 '', ' 70,582,388 Notes: (1) Reference is made to Note 1 to the accompanying balance sheets. (2) Reference is made to Note 4 to the accompanying balance sheets. (3) Reference is made to Note 6 to the accompanying balance sheets. 22 1956 Argentine paper pesos (Note 1) 227,667,142 74,125,093 153,542,049 7,994,084 1,966,956 125,820 163,628,909 4,778,207 11,623,169 4,853,290 21,254,666 142,374,243 48,502,604 93,871,639 34,830,650 59,040,989 1956 Argentine paper pesos (Note 1) 79,335,037 59,040,989 138,376,026 18,600,000 37,200,000 2,800,000 942,210 59,542,210 78,833,816 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 67 BROAD STREET NEW YORK ACCOUNTANTS' CERTIFICATE St Joseph Lead Company,' We have examined the balance sheet of Compania Minera Aguilar, S. A. (incorporated and doing business in Argentina) as of December 31, 1957 and the related statements of income and unappropriated earned surplus for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. By reason of progressive currency inflation, a special appropriation of 35,431,700 Argentine paper pesos for replacement of capital assets has been made out of income for the year. Similar special appropriations were made out of income in the preceding six years, aggregating 115,110,950 Argentine paper pesos. In our opinion, accepted accounting principles require that such appropriations be set aside out of retained earnings. In our opinion, except as described in the preceding paragraph the accompanying balance sheet and statements of income and unappropriated earned surplus, with the footnotes thereon, present fairly the financial position of Compania Minera Aguilar, S. A. at December 31, 1957 and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. 'r; * February 11, 1958. HASKINS & SELLS 23 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. PROXIES FOR ANNUAL MEETING This Report is sent to Stockholders of the Company in advance of the solicitation by the Board of Trustees of proxies for the Annual Meeting of Stockholders to be held on May 12, 1958 at 11 A.M. Proxies will be solicited commencing on April 11,1958. 24 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 95? Outf P D Action PRESIDENT'S REPORT TO EMPLOYEES OF THE ST. JOSEPH LEAD COMPANY Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CORE DRILL seels Pea Ridge iron ore .ri C4j|j NEW POWER LINE feeds Pea Ridge area . . . WORK CAGE, sinking first Pea Ridge shaft Operations. in 1957 cut seriously into high level throughout 1957. The trouble is caused the incomes of all metal by over production of metal and by the efforts of producers. St. Joe's earnings suffered accordingly, foreign producers to sell their surplus production to although the decline in our income was less drastic the United States. In 1957, there were thrown on than that experienced by most domestic producers. ' ; U.S. markets 169,000 tons of lead and 257,000 tons From mid-1957 on, our earnings trended downward of zinc in excess of the quantities needed by U.S. steeply, and about 72% of our net profit for 1957 ^ industry despite the continuing high level of con- wasproduced inthe first half of the year. 77 joe sumption. All of this exeess lead and zinc is repre did notatonceshow the full effect of the plunge sen ted by imports. in metal prices that began in May, 1957, only because There is no possibility of meeting this kind o'' substantial tonnages of our lead and zinc had already competition from abroad except through Governmen: been sold at prices previously in effect. In addition, regulation. We have repeatedly advocated in recent we received during the first half of 1957 over years the establishment of an import tax that would $1,500,000 in dividends, principally from our opera- become effective only when U.S. prices of lead and tions in Argentina and North Africa. zinc dropped below reasonable "peril points." Lcgh- Lead and zinc prices held at 16c per lb. and lSVic lation to establish this type of protection was offered per lb. respectively until early in May, 1957. Prices by the Administration early in 1957, but Congrcs. then declined sharply, and throughout the second failed to approve it. Thereafter, the industry sought half of the year, they held to about their present relief through the Tariff Commission and is now levels of 13c for lead and 10c for zinc, evdn though awaiting the Commission's decision as to recommend- thc world prices have been lower than 9c for lead ing that tariffs on lead and zinc be increased, and 8c for zinc. Until last May, the United States We know that in the long run consumption o( Government had supported metal prices by taking lead and zinc is bound to increase, nevertheless, wi surplus metal off world markets. Prices promptly will not find 1958 as easy sledding as was 1957. Our dropped when this support was withdrawn.'1' problems will increase from now on rather than Actually, consumption of lead and zinc, both in decrease, and in the remainder of this Report, I shall the United States and throughout the world, was at a outline what wc must do to solve them. 2 you wish full financial information <n addition to the summary Reproduced with permission of the copyright owner Further reproduction prohibited without permission. FAST LOADING and haulage in l ad Belt . . . We Sold: Pig lead, tons....................................................................... Slab zinc equivalent, tons.................................................. Sulphuric acid, tons............................................................. We Received: From sales ........................................................................... From our investments.......................................................... From other sources.............................................................. Our gross income totaled ........................ We Kept in Reserve: ; To replace worn-out plants and equipment............. .. To replace depleted ore reserves............................ .......... We Paid: In wages, salaries, supplies, and other production costs................. In sales, administrative, exploration, and pension fund costs..................................... ................. In taxes, Federal and State ^ ............... We Had Left: A net income amounting to................................................. Of which, we paid as dividends to our stockholders ...., And kept for use in the business............... ........................ Our net earnings, per share of stock, amounted to........ Our dividend payments, per share of stock, amounted to . Our Current Assets (at year's end)............... ................ Our Current Liabilities (at year's end)......................... Number of Our Employees............... ........................... Number of Our Stockholders.......................... .. V........ Shares of Our Stock Outstanding................. .. jot :re encouraged to ask your supervisor for a copy of St. Joe's Annual Report 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. With Metal Prices . . . and likely to remain so, for some time, we in St. Joe face the absolute necessity of increasing the efficiency of our production and cutting our costs. In this section of the Report, I would like to outline why this is so and suggest what we can do, and are doing, to keep our operations profitable. Some industries, principally manufacturing, can easily adjust their sales or their prices to meet shifting market conditions. By doing a better selling job or by reducing prices, or both, they can maintain their rate of income, or even increase it, in bad times. Much as we would like to do the same, it is beyond our power to adopt the same methods. If consumers of metals decide to stop buying and to use up the stocks of metal they already have, it is almost impos sible to make them change their minds. By the same token, a reduction in price does not always guarantee increased sales. Why then do we not simply keep our prices at a high level and ride out the storm? With lead and zinc freely available from abroad at prices that can always be placed substantially below the domestic level, it would be useless for us to attempt to hold a price much higher than that of the imported metal. We are all aware, domestic and for eign producers alike, that we are now selling lead and zinc much more cheaply than its production costs warrant, but until production is again in balance with supply, there is no possibility of raising our selling prices. In last years Report, we expressed the earnest hope that the Federal Government would have a ready solution for the problem it would create when it sus pended its metal purchasing programs. This solution was presented in 1957 in the form of the Administra tion's long-range mineral policy, but Congress failed to enact the necessary legislation. It appears then that the lead and zinc industries face a continuance of low prices and excess supplies until unprofitable operation abroad, or tariff protec tion, diminishes the flood of imports. We cannot count entirely on Government help, even though our problem is largely of the Government's making. What then should be our course? Should we adopt the suggestions of some of our critics and simply abandon domestic mining and leave the domestic consumers entirely at the mercy of foreign suppliers? I feel sure that one need not have worked with St. Joe for very long in order to realize that that course is farthest from our thoughts. Our efforts to solve this problem for St, Joe, and for the industry, will take the follow ing three directions: 1. We will work actively for a more equitable tariff protection that will encourage needed imports, hut will prevent the damage of unneeded imports under which we are now suffering. 2. We will work actively and with determination to find still more effective ways of reducing costs and increasing productive efficiency throughout our mines, mills, and smelters. 3. We will proceed vigorously with the new proj ects we now have in hand, such as the Meramec iron project and the Viburnum lead project in Missouri, and will keep alert to every other opportunity that promises to maintain or increase our earnings and to preserve the continuity of St. Joe as a living, growing entity, profitable for its employees and its share holders alike. t IS 4 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LEAD r The Domestic Situation From domestic mines .......... 1957 1956 SHORT TONS EST. 334,000 353,000 Scrap............... 490,000 507,000 imports................. 517,000 460,000 From producers' metal stocks. (50,000)* (8,000)' Available supply 1,291,000 1,312,000 Consumption .. 1,122,000 1,210,000 Surplus ....... 169,000 102,000 `Denotes Increaio in stocks ZINC The Domestic Situation From domestic mines* ........ 1957 1956 SHORT TONS EST. 425,000 447,000 Secondary sources .... 72,000 72,000 Imports (Ore and metal).. 792,000 770,000 From producers' metal stocks. (98,000) (28,000) Available supply 1,191,000 1,261,000 Consumed and exported ... Surplus........... 934,000 1,018,000 257,000 243,000 'Less line used for pigments Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. THOUSANDS OF SHORT TONS 160 THOUSANDS OF SHORT TONS 160 LEAD-ST. JOE PRODUCTION AND SALES SHORT TONS Lead concentrates: From Company's mines......... Purchased.............................. 1957 163,079 46,309 1956 158,861 44,353 Pig lead produced..................... 137,940 137,429 Pig lead sales: From smelter......................... Purchased pig lead ....... 121,550 62,392 .. ' ' . 137,772 61,522 In 1957, we could not sell oil the lead we produced, largely owing \p pressure of lower-priced imported metal. Note below how consump tion, except for storage batteries, declined slightly in 1957. ZINC--ST. JOE PRODUCTION AND SALES SHORT TONS Zinc concentrates: From Company's mines .... Purchased............................. Slab zinc equivalent of: All concentrates................... Smelter production............... Sales, oxide and metal .... Purchased slab zinc............. Sulfuric acid sales ..................... 1957 123,417 105,604 144,011 151,544 135,499 56,613 204,255 1956 114,138 126,164 146,897 136,879 132,652 48,672 190,004 In 1957, line sales also fell short of production under pressure of im ports. Note below how die-casting consumption increased, galvaniz ing declined. 1200 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. . . . put into action plans for several new projects that are aimed at cutting costs of production, at developing new sources of production, or at launch ing St. Joe in a new field, that of iron ore production. Progress on these new projects is described later in this Report. In this section, I would like to touch on the efforts made at various divisions last year to increase productive efficiency and to cut operating costs. IMPROVED DRILL RIG for falter and safer drilling of lockhammer prospect holes in back of high stopes in Lead Belt In the face of rising costs and falling metal prices, the Southeast Missouri division redoubled its efforts to increase efficiency and cut costs. By the end of 1957, 48.9% of all mining was being done with track less equipment. Four overhead loaders and 16 diesel trucks were purchased for use underground. Development work had to be curtailed slightly, and certain high-cost operations wrere discontinued. Net result of these efforts was an increase of 3.58% over 1956 in tons of ore produced per total man-shift worked. Grade of ore mined was 0.03% higher than 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. NEW MECHANICAL FLOTATION MACHINES under test in Balmat mill in effort to raise zinc recovery, reduce costs DIALS OF JOSEPHTOWN'S SPECTROPHOTOMETER show analysis of special alloys, thus enabling better control, faster production in 1956, and cost per ton of pig lead produced was slightly lower than in 1956. Tons of ore'milled per man-shift in the mills increased 4.91%, and recovery was up 030%. 3 At Indian Creek, larger trucks for underground haulage and improved loading ramps enabled main taining a production of 2,100 tons per day and in creased efficiency that yielded an increase of 8.54% in tons of ore per man-shift over 1956. At Mine La Motte, No. 26 shaft was completed, and development of the mine began. Several improve ments in the mill, including a new zinc circuit, were put into effect. Over 9,000,000 tons of crude ore have been pro duced at the Balmat mine since operations began in 1929. To insure continued production, new sources of ore must be acquired. Zinc mineral rights were purchased on about 3,000 acres of land during 1957, about 1,600 acres of which are in the vicinity of the Balmat mine. An improved shaft sinking method was developed in the Balmat No. 2 shaft where a mechanical shaft mucker is used in sinking the shaft below the 1900-ft. level. Inclined at 40, this shaft had reached approxi mately 2,100 feet below the surface by the end of 1957. The bottom of the Edwards Countershaft, which services the Edwards mine below the 1500-ft. level, is over 3,100 feet below ground level. In the Balmat mill, new mechanical flotation ma chines were installed late in 1957 at a cost of $67,000 in an effort to increase milling efficiency and cut operating costs. These new machines are treating half of the Balmat mill's tonnage, and careful evalua tion will be made this year to determine by how much zinc losses can be reduced and bow much saving in power and reagent cost can be made. Increased efficiency was noted at Herculaneum, where a concerted effort on the part of the entire staff has been made to improve operations. For ex ample, three new centrifugal blowers for the blast furnaces were installed to provide better furnaefc operation. Stocks of concentrate have been built up to allow more efficient scheduling and control of plant operation. Owing to depressed zinc prices, the electric zinc furnace was shut down in 1957, but its performance had been qute satisfactory, and it is available for use when the zinc market improves. It has a capacity of 13-15 tons of Prime Western Zinc per day. A new furnace, No. 15, was completed early in 1957, which gave the Josephtown smelter a theoreti- f Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. NEW BLOWERS AT HERCULANEUM smelter supply blast furnace air more efficiently, yielding improved furnace operation CONSTRUCTION of George F. Weaton station (foreground) which should supply full power to smelter by August 1958 cal capacity of 11,500 tons of slab zinc per month, but efforts to increase productive efficiency had raised actual plant capacity to about 12,500 tons by the end of the year. Several examples of improved operations follow: 1. Recording density meters helped simplify acid plant operation. 2. New-type cyclones reduced zinc losses and aided sinter plant operation. 3. Aging of secondary material briquettes saves about $50,000 annually in handling costs. i ; 4. Dross melting furnace helps extend furnace life | about 10%. | 5. Direct reading spectrophotometer for quick analyses has reduced need for special alloy re-melts with resulting savings of $30,000 to $35,000 annually. 6. Maintenance records system may reduce main ! tenance costs by about $100,000 per year. l | ^ llie George F. Weaton Station, at Joseph town, one of the most efficient, exclusively industrial, coalfired generating stations in existence, is expected to , begin test operations in the second quarter of 1958. i The high level of efficiency expected of the installal tion is exemplified by the primary steam conditions , of 1,800 p.s.i. and 1,000 F, Operating and main tenance staffs from Josephtown's organization are now being trained. The saving in power costs when the plant is in operation is expected to be substantial. HEADFRAME FOR SHAFT to handle men, supplies, and waste rock at Pea Ridge iron project near Sullivan, Missouri 9 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. /X T fE SQUARE-SETTING at Aguilar in Argentina handles much of mine output, owing to difficult ground conditions SANTANDER lead-line project in Peru is now stripping orebody, building mill. Road lead* from mine (right) to mill (left) In Argentina, the earnings oF Cia. Minera Aguilar again set a new record oF 66,645,892 pesos after deducting special reserves For the replacement of capital assets totaling 35,441,700 pesos. In 1956, the comparable figures were 59,040,989 pesos and 34,830,650 pesos respectively. The dollar equivalents of the net earnings at the hce rate of exchange exist ing at the end oF each year were $1,801,240 and $1,574,426, respectively. St. Joe ieceivcd dividends From Aguilar in 1957 amounting to $1,169,819, the 1956 receipts were $589,171. Ore reserve outlook at Aguilar continues excellent; prospecting and development have been most encour aging. The stafF is one oF the strongest we have ever had; the transportation problem has been much im proved; labor relations continue most cordial. How ever, the lack oF Firm economic and political leadership and the continued growth in nationalistic thinking in Argentina is most discouraging From the short-range point oF view, SulFacid, S.A., at Borghi in Argentina; had its best year to date, Financially, and also made good progress in pilot plant work For a proposed electrolytic zinc plant. Cia. Metalurgica Austial, Argentina's electrothermic zinc smelting plant, set a record For production and earnings in 1957. The major improvement was the installation oF new St. Joe condensers. In Canada, pilot plant work For Brunswick Min ing & Smelting Corp. to develop a milling flowsheet producing selective concentrates oF copper, lead, zinc, and pyrite was success!ully completed by mid-Decem ber, 1957. Preliminary design studies For layout oF a 2,000-ton per day concentrator, a lead smelter, and dock Facilities were begun, but owing to the depressed lead and zinc markets, no decision had been made by the end oF 1957 to proceed with construction. In North Africa, at two oF the three North AFrican properties in which St. Joe has an interest, political disturbances in the area caused suspension oF pro duction For only two weeks in 1957, in January. Production at all three continued uninterruptedly throughout the remainder of the year. As the result oF St. Joe's 17.15% interest in two of these companies, Soeiete Nord AFrieaine du Plomb and Societe Algerienne du Zinc, we received dividends oF $512,454 in 1957. On the Harris Ranch properties in Texas, our joint venture with Continental Oil Co. in petroleum pro duction produced in 1957 a net royalty to St. Joe oF $603,704. Total royalties From oil since the begin ning oF the venture arc $1,194,259. As oF the end of 1957, there have been 24 wells drilled on the Harris Ranch property, with 20 of them producing, one shut-in, and only 3 dry anti abandoned. St. Joe also lias a joint venture with Cerro de Paseo in explor ing For petroleum in Southwestern Louisiana. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. PROCRESS New Lead-Zinc District and a Major Iron Ore Producer Brighten our Outlook Near Viburnum, where Washington, Crawford, and Iron Counties join, St. Joe is developing what appears to be an outstanding lead discovery. The first pay hole was drilled in Crawford County in 1955, and at present there are 9 diamond drills and 20 chum drills exploring the area. Development plans for the area began early in 1957. Work on the No. 27 shaft started in September. As maps from the aerial surveys become available, they will be used in planning other shaft sites, the mill site, tailing disposal area, power lines, roadways, and a townsite. Preliminary work at No. 27 shaft is on schedule, and full-scale shaft-sinking should begin about the first of March, 1958. In Peru, progress at the new Santander project has been most satisfactory. At the end of 1957, stripping had begun at the open pit, and construction had started at the mill and camp. The road between the power plant and the mine is complete, and work at the power plant is well underway. All machinery is purchased, and the greater part of it has arrived m Peru. At Pea Ridge, additional drilling during 1957 has indicated resources of iron ore that confirm the esti mates on which the project was established. This iron ore will be developed and mined by a new com pany, Meramec Mining Company, to be owned (50% each) by ourselves and Bethlehem Steel Corp. With an eventual capacity of 2,000,000 tons of iron ore annually, the project is expected to enter production in the latter part of 1962. The project will require building 23 miles of track from near Cadet on the main line of the Missouri Pacific to Pea Ridge, and the possible erection of Jock facilities for loading barges on the Mississippi River. The town of Sullivan is near enough to the property so that no new townsite need be built. Union Electric Company has completed two 138,000volt transmission lines to the plantsite. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ... is crowded with critical problems which can brighten or darken our outlook depending on how they are resolved. We have a measure of control of only a part of them. On a long-range basis, growth and progress for our Company seem assured, both because of tbe inevitable eventual increase in demand for lead and zinc and because of the efforts our Company and our industry will make to encourage widening use of these metals. St. Joe's attention has been and will con tinue to be directed toward improving our Company's position in its industry. As for 1958, all present indications point toward a consumption of lead and zinc that will certainly be no higher, and possibly somewhat lower, than in 1957. Since the first of this year, general business conditions in the U.S. have been quieter than last year, and even should they pick up later, the average for the year will probably not equal 1957. The large surpluses of both metals which exist today in the U.S. will tend to delay price increase even should tariff relief be granted the lead and zinc indus tries. Prices may strengthen over the next year as world surpluses of metals are re duced, but this improvement will not come rapidly unless some entirely unforeseen political upset occurs which would suddenly increase demand for metals. In our planning for both the immediate and the long-term future, we cannot count on sudden surges in demand. We must base our estimates and our efforts on only moderate price increases and never lose sight of the fact that the only sure weapon we have against shrinking profits is our ability to increase the efficiency of our operations and cut production costs. You have made strong and sincere efforts this past year to use this weapon ever more capably. I must ask even more of you in the year ahead. NEW YORK MARCH 11, 1958 Reproduced with permission of the copyrighltpwner. Rrirther reproduction prohibited without permission.