Document Ex9vj282Zvp73vbq2rmRaGyQx

Saint Joseph Lead Company Annual Report -- 1953 America's Corporate Foundation; 1953; ProQuest Historical Annual Reports Pg- 0_1 \ > NINETIETH ANNUAL REPORT TO THE STOCKHOLDERS 1953 St. Joseph Lead Co. (' '" I, 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 10, 1954. Proxies will be solicited commencing on April 7,1954. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY INCORPORATED MARCH 25, 1864, UNDER THE LAWS OP THE STATE OF NEW YORK EXECUTIVE OFFICES * 250 PARK AVENUE . NEW YORK 17, N. Y. Board of Trustees Clinton H. Crane.............................................................................................. Chairman 1911 Daniel K. Catlin.............................. President, Catlin Company, St Louis, Missouri 1912 Irwin H. Cornell.................... Vice President, Cornell Iron Works, New York, N. Y. 1913 Andrew Fletcher......................... .... ................................................................ President 1921 Hendon Chubb........................................ .... Chubb & Son, New York, N. Y. 1928 C. Merrill Chapin, Jr........................................................... Vice President 1933 Arthur M. Anderson........................................Vice Chairman, Board of Directors, J. P. Morgan & Co. Incorporated 1944 George I. Brigden....................................................... . Vice President and Treasurer 1945 H. DeWitt Smith.............................................Consulting Engineer, Neiv York, N. Y. 1948 John R. Shepley . .............................. Vice President, Si. Louis Union Trust Company 1950 Francis Cameron....................................................... ..... Vice President 1953 Robert Bennett.................... .... .......................................................................... Secretary 1953 Bernard F. Desloge.......................................................................... St Louis, Missouri 1953 Executive Officers Clinton H. Crane . . . 4 4 . ,44,. . , . . . . Chairman Andrew Fletcher . . ..... ... . . . President C. Merrill Chapin, Jr. ............................................. Vice President Francis Cameron........................ ............................. Vice President George I. Brigden.........................Vice President and Treasurer Charles R. Ince ...... . . . . . . Vice President R. J. Mechin .... . ... . . . Vice President Robert Bennett . . .... . . ..... Secretary James G. Colvin .... Asst Treasurer and Asst Secretary United States Division Managers MINES SMELTERS Elmer A. Jones Southeast Missouri George F. Weaton Josephtown, Pennsylvania Marshall G. Jones Edwards-Balmat, N. Y. William T. Isbell Herculaneum, Missouri South American Executive Officers Donald B. McGilyba Vice Pres. Cia. Minera Aguilar, S.A, t?nTAimA If Pres. Sulfacid, S.A. PunoA A r'TVrzr&V' Pres. Cia. Metalurgica Austral, S.A. Transfer Office............................................................ 250 Park Avenue, New York 17, N. Y. Registrar............................................City Bank Farmers Trust Company, New York 5, N. Y. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission NINETIETH ANNUAL REPOET FOR THE YEAR 1963 ST. JOSEPH LEAD COMPANY To the Stockholders: We are pleased to submit a report of the Company's operations for the year 1963, includ ing the consolidated balance sheets at December 31, 1963 and December 31, 1962, and the sum maries of consolidated net income and earned surplus for the years ended on those dates, for St. Joseph Lead Company and Subsidiaries. Similar statements for Compania Minera Aguilar, S.A., shown in Argentine pesos are also included. Earnings and Taxes At the beginning of 1953, lead was selling at 14%$ per pound, but by April it had declined to 12$; then a slow recovery followed to 14$ in July. However, in September it decreased to 13*/^ where it remained to the end of the year. The downward trend in zinc was continuous, starting the year at 13$ per pound, it declined to 10$ per pound by September, where it held for the balance of the year. These declining prices, caused by the extraordinarily large imports of both metals which flooded our markets, had an adverse effect on the company's earnings. The fourth quarter's earnings were further affected by the provisions for addi tional Federal Income and Excess Profits taxes for 1953 and previous years, in the total amount of $798,477. The 1953 consolidated net income, after all charges, was $6,300,342, as compared with $9,638,455, in 1952. This is equivalent to $2.32 per share on the 2,716,222 shares pres ently outstanding, compared with $3.55 in 1952 on a similar number of shares. The provision for Federal and State income taxes in 1953 amounted to $4,344,733 which is equivalent to $1.60 per share, as against $5,667,894, or $2.09 per share the previous year. As there was no further need for the Reserve for Deferred Prospecting, Development and Exploration amounting to $483,000, or for the Reserve for Contingencies of $800,000, they 2 were restored to Earned Surplus at December 31, 1953. Since it is believed that providing for depre ciation on approximately 60% of the property covered by Certificates of Necessity at the 20% rate permitted under the law was too rapid, the rate was changed in November to 8%, retroactive to January 1,1953. Because of this change, the provision for depreciation during 1953 will be $274,580 less than it would have been if the deduction for accelerated amortiza tion had been continued. As the Company will continue to claim accelerated amortization for income tax purposes, an additional reserve for Federal taxes in the amount of $138,204 has been provided. This reserve will be applied against a possible increase in taxes because of the lower depreciation charges after the expira tion of the five-year period, when the acceler ated amortization is discontinued. The table below gives a record of the com pany's earnings for the ten-year period ended December 31, 1953. These earnings do not include the earnings of Compania Minera Aguilar, S.A., which are shown separately in this report, except to the extent of dividends in the amount of $294,340 U. S. dollars received in 1947, $69,574 in 1951 and $69,874 in 1952, as permission to convert the remaining peso divi dends has not been obtained from the Argentine authorities. TEN-YEAR EARNINGS 1944-1958 Year Consolidated Net Income After Income Taxes of 1944... . 1945 1946 . 1947 1948 . 1949 .. 1950 1951.. . . 1952 . . . . . . 1953 ... . . $ 5,171,421 4.829.815 5,807,131 12,537,761 9,636,737 8,564,436 12,211,615 13,577,237 9,638,455 6,300,342 $ 1,756,920 1.164.905 1,923,373 4,479,659 3,776,836 2,889,925 7,976,468 13,819,817 5,667,894 4,344,733 Reproduced with permission of the copyright owner. Farther reproduction prohibited without permission. World Markets for Lead and Zinc It was pointed out to stockholders in the 1952 Annual Report that starting* about April of that year, the European producers and con sumers realized that a shortage of lead and zinc no longer existed and commenced to reduce their accumulation of both metals by exports to the United States. This situation continued during the year 1953 as shown by the following table of U. S. imports: Imports of Short Tons of Metal, Concentrates and Scrap--Combined Metal Content Basis Lead . . . Zinc................ 195S 555,000 749,000 1952 637,307 568,476 1951 265,886 397,679 In spite of large consumption in this country, it was obvious that imports of this magnitude could not be absorbed without a drastic reduc tion in the price structure. The low levels reached in September had the effect of dis couraging offerings to the United States froiii foreign sources and imports were reduced dur ing the last quarter of the year. However, the United States will continue to remain a very desirable market for foreign producers. Your Company has therefore, joined with other com panies mining lead and zinc in the United States in requesting relief from the flood of unneeded imports. The Administration and Congress are now giving consideration to a number of pro posals, such as import quotas, domestic sub sidies, additional purchases for government stockpiling, and tariff adjustment. The exist ing tariffs on both metals are hardly more than nominal and do not begin to compensate domes tic producers for the difference in labor rates, which are a part of our high standard of living. We believe that an adjustment upwards in lead and zinc tariffs would in no sense prevent im portation of the metal we need, but would result in a sufficient increase in the American price to maintain domestic production at approximately the 1951 level. The following figures show for the year 1953, the sources of supply of lead and zinc in the United States, and their consumption by industries as compared with 1952: LEAD. Available Supply: U. S. Mine Production From scrap................ Imports................ . Total Supply . . . * 195S (Est.) 335,000 435,000 555,000 1,325,000 Consumption: Batteries...................... : 1 Ethyl gasoline.............. ......... Cables............................... . ... Construction (pipe, sheets, etc.) , Paint............................ . .. . . Other uses .. . ... ..... 385,000 162,000 146,000 110,000 82,000 300,000 Total Consumption .. . 1,185,000 1952 (Final) 390,000 435,000 637,000 1,462,000 351,000 147,000 143,000 110,000 76,000 304,000 1,130,000 The lead surplus In 1952 of 332,000 tons was mainly absorbed by shipments to Government stockpile, but in 1953 prac tically the entire tonnage of unused imports was reflected by increases in stocks at producer's plants. 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ZINC Available Supply: Recoverable U. S. Mine Production .. Less-Used to make pigments............ 1953 (Bat.) 537,000 97,000 Recoverable domestic zinc available to metal smelters................................ Scrap zinc .......................... ............. Imports of concentrates (Recoverable zinc content) .................. ,. .;.,. 440,000 50,000 458,000 Total ............ ............................ Add-Imports of slab zinc .. . .. . 948,000 235,000 Total zinc metal available . 1,183,000 Consumption: Galvanizing ... .......... . Zinc-Base Alloys........................ Brass..................................................... Rolled Zinc . . . ...... Other.................................... .. .... 404,000 302,000 177,000 54,000 38,000 Total Consumption................ Exports................................................ 975,000 18,000 Total zinc metal consumed and exported.............................. 993,000 1952 (Final) 666,000 91,000 575,000 55,000 404,000 1,034,000 115,000 1,149,000 378,000 237,000 156,000 51,000 31,000 853,000 58,000 911,000 As in the case of lead, the 1952 surplus of 238,000 tons went to increased inventories and Government stockpile, but in 1953 producer stocks absorbed the unneeded tonnage. Dividends Cash dividends of 75 cents per share were paid during the first three quarters of 1953, and 50 cents per share in the fourth quarter, making a total of $2.75 per share for the year. The following is a record of cash dividend pay ments for the ten-year period through 1953: Year DIVIDENDS 1944-1953 Amount Per Share 1944 .............. . . . . 1945. . . .. 1946. .. . .. . 1947................. .... 1948 ............ , . . 1949................. ........... 1950................. .... 1951................. ........... 1952................. ........... 1953 ........... . . . $3,950,912 3,950,312 3,950,912 5,926,368 6,420,232 6,420,232 6,420,232 8,023,749 7,776,373 7,468,290 $2.00 2.00 2.00 3.00 3.25 3,25 3.25 3.25 3.00 2.75 4 Gash and U. S. Government Securities The Company's cash and U. S. Government securities position amounted to $14,521,292 at December 31, 1953, which is $12,793,111 less than the corresponding total at the end of the previous year. Capital expenditures accounted for approximately $4,788,000 of this decrease. The acquisition of a 40 % interest in the Bruns wick Mining and Smelting Corporation Limited cost $2,342,000, and an increase in inventories of approximately $4,170,000, accounted for most of the balance. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Net Working Capital The consolidated net working capital (cash resources, receivables and inventories, minus current liabilities) was $25,413,178 at Decem ber 31, 1953, as compared with $31,793,325 at December 31, 1952. A summary of the prin cipal items accounting for the changes during 1953 are as follows: Net working capital at January 1,1953 . . .. Additions: Net income after all charges............ .................... Charges to income for depreciation, depletion, other reserves and other items which did not affect working capital..................................... $31,793,325 6,300,342 1,917,974 Deductions: \ Dividends paid............. Capital expenditures ............. Investment in Brunswick Mining and Smelting Corporation Limited stock ....................... $7,468,290 4,788,011 2,342,162 $40,011,641 14,598,463 Net working capital at December 31, 1953 .............. $25,413,178 Construction and Expansion Program The three-year expansion program which started in 1951, was about 90% completed by the end of 1953. Capital expenditures since 1945 are shown in the table below: COMPARATIVE CAPITAL EXPENDITURES Year 1945 ............ 1946.............. 1947.............. 1948.............. 1949............ 1960.............. 1951.............. 1952.............. 1953.............. Lead Belt $ 10,414 66,195 830,993 469,093 774,658 903,776 2,549,327 3,793,396 3,972,871 Josephtown $ 3,096 699,645 5,316,460 1,776,183 147,536 177,071 564,768 1,768,048 720*665 Edwards-Balm a t $197,358 54,374 151,968 81,590 160,553 929,617 685,128 90,896 94,475 Total $ 210,868 820,214 6,299,421 2,326,866 1,082,747 *2,010,464 *3,799,223 *5,652,340 4,788,011 * Includes items capitalized by agreement with the Internal Revenue Service applicable to prior years amounting to $635,491 in 1950, $559,920 in 1951 and $161,784 in 1952. Anti-Trust Suit On October 14, 1953, the United States com menced a civil action against St. Joseph Lead Company and American Smelting and Refining company in the U. S. District Court for the Southern District of New York, alleging viola tions of the Sherman Anti-Trust Act in the conduct of the lead business. The complaint recites numerous transactions extending over a period of many years. Insofar as they relate to St. Joseph Lead Company, the Company vigorously denies that it has in any way violated any of the anti-trust laws, and has filed an answer so stating. ' 5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Sales volume again declined in 1953, and toiabd $88,002,426 compared with $105,211,886 in 1952. This decline was entirely due to lower metal prices, inasmuch as the combined tonnage of lead and zinc sold was higher than in the previous year. Lead sales from the Company's production showed a decrease in 1953 and amounted to 95,980 tons as compared with 98,848 tons in 1952, whereas sales of zinc content in slab zinc and zinc oxide increased from 89,414 tons to 103,009 tons in 1953. Approximately 61% of the gross earnings came from zinc and 39% from lead, in comparison with 50% for each in 1952, and 57% for zinc and 43% for lead in 1951. TEN-YEAR COMPARATIVE LEAD SALES AND STOCKS IN TONS Lead Sales *Pig Lead Si, Joe Purchased Total Equivalent Year Production Lead Sold Lead Sales of Stock 1944.............. . . . 1945.............. . . . 1946.............. ... . 1947.............. .... 1948.............. .... 1949 ........... .... 1950........... .. . .. 1951.............. .... 1952.............. .... 1953.............. . . . 155,806 139,934 131,664 108,440 77,011 90,653 127,803 97,308 98,848 95,980 46,799 48,483 33,872 53,438 48,488 63,276 84,347 50,597 61,777 71,212 202,605 188,417 165,536 161,878 125,499 153,929 212,150 147,905 160,625 167,192 16,683 25,824 10,048 11,546 16,483 30,125 11,850 16,031 17,063 23,510 * Includes purchased lead and estimated recoverable lead in concentrates together with other lead stocks in process of refining at smelters. Southeast Missouri The mines and mills in the Lead Belt operated without interruption during 1953. Ore and chat milled amounted to 6,860,627 tons, a decrease from 7,102,098 tons in 1952, with a lead content, 90% basis, of 98,036 tons, an increase from the 96,246 tons in the previous year. New ore devel oped in 1953 approximated the tonnage mined. The Indian Creek project, in Washington County, was virtually completed by the end of the year, and a limited production approxi mating 500 tons per day, is now being treated. The tonnage will gradually be expanded to the 2,000-ton per day capacity, as underground development proceeds. The Indian Creek Mine and Mill Plant represents an investment of approximately $6,000,000 and is believed by your Management to be a most modern and efficient plant. At the Herculaneum smelter, pig lead output decreased to 65,899 tons, from 66,168 tons in 1952. The construction program to increase the smelter's capacity to 100,000 tons of pig lead annually, was about 90% completed in 1953. Commencing in January 1954 arrangements have been made to handle the additional ton nage, at the expiration of the thirty-year con tract with the American Smelting and Refining 6 Company. Under the new 5-year contract with that company, all production in excess of 100,000 tons lead content will continue to be smelted at East Alton, Illinois. The dismantling and rebuilding of the zinc furnace is now under way. Edwards and Balraat Production at this Division increased to 99,374 tons of zinc concentrates in 1953 from 63,470 tons the previous year. The large in crease is in part due to the full operation of the new mill facilities at Balmat, which were completed in 1952, and because of the two-andone-half months' strike in that year. The entire zinc production of both these mines was shipped to the Josephtown Smelter. Josephtown Zinc content of the 1953 production at the Josephtown electro-thermic smelter increased to 121,265 tons from 108,172 tons in 1952. Employee Relations Employee relations at all divisions continued to be very satisfactory throughout the year. The number of U. S. employees at December 31, 1953 was 5,017 compared with 6,159 at the end of 1952. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Oil Exploration In the Harris Ranch Block, Crockett County, Texas, jointly owned with Continental Oil Com pany, two producing wells were completed dur ing the year, and the third well was completed early in 1954. Harris "C" #2 is producing from the Strawn horizon, with an allowable under the Texas Railroad Commission of approxi mately 139 barrels per day. Harris "D" #1 well, on the same lease block, has an allowable of about 105 barrels per day. Harris "C" #3 well is still under test, and no allowable for this well has been set. This well, while productive, is disappointing, especially when considered with a well drilled by Humble-Continental on adjoining acreage to the Northeast which was non-productive. The high gas-oil ratio is respon sible for the low allowables on these wells, and this will probably continue until a market for the gas and condensate can be established. On the West Poplar Block, Roosevelt County, Montana, a tract of approximately 6,000 acres, also jointly held with Continental, a second test well, Past #2, was completed. Neither the Fast #1 nor the Fast #2 wells, on production tests, came up to the original expectations, and both wells have been shut in as being non-com mercial under present conditions. A test well drilled jointly with Continental, in Cameron Parish, Louisiana, was abandoned as a dry hole, and the large lease block which had been acquired in this area, has been sur rendered. It is expected to continue the oil exploration program during 1954, but at a considerably reduced rate of expenditures. Foreign Exploration During the year your Company's wholly owned Canadian subsidiary, Leadridge Mining Company Limited was successful in developing a substantial orebody on a group of claims in the Bathurst District of New Brunswick, Canada owned jointly with Anacon Lead Mines Limited and M. J. Boylen et al. Subsequently, these properties together with other holdings owned jointly with the M. J. Boylen interests were consolidated with the Brunswick Mining and Smelting Corporation Limited through the exchange of properties for shares. Leadridge Mining Company Limited now owns 40% of the issued capital stock of Brunswick, the book cost of which, including certain shares pur chased for cash, stands at $2,342,162. Lead ridge Mining Company Limited is committed to loan Brunswick up to $7,500,000 (Canadian funds) as needed for development and equip ment and St. Joseph Lead Company has agreed to make $7,500,000 (U. S. funds) available to Leadridge for this purpose. This loan may be subordinated to other indebtedness of Bruns wick not to exceed $17,500,000 (Canadian funds) on terms and conditions satisfactory to Leadridge. Brunswick holds eight groups of claims, totaling 642 claims, on which there are now two known orebodies. The solution of a complicated metallurgical problem is being aggressively followed, and a 400-foot auxiliary shaft, and the stripping of a portion of the original Brunswick discovery, will be under taken in 1954. Developments at the property of Nord Africaine du Plomb, in which your Company has approximately a 17^% interest, continued to place in sight, additional reserves. During the year 1953, the plant operated at approxi mately 40% of the 1,000-ton mill capacity. Earnings were used to liquidate the exploration and equipment debt. Compania Miners Aguilar, S.A. and Associated Companies Compania Minera Aguilar's net profit of 32,890,744 Argentine pesos was the highest in the Company's history and was earned after deducting depreciation and special reserves of 14,123,960 pesos and income and excess profits taxes of 32,203,096 pesos. This compared to a net profit of 19,265,733 pesos in 1952. Cash and marketable securities increased approximately 40,305,253 pesos during the year. Receivables increased about 11,892,620 pesos, primarily due to Compania. Metalurgica Aus tral's inability to sell the zinc they produced. Inventories of concentrates increased moder ately. There were only minor changes in the produc tion of approximately 20,000 metric tons of lead and 32,000 metric tons of zinc concentrates, as compared to last year. The potential ore reserve position of the Aguilar Mine improved mar kedly. Several new mining properties were examined, two of which gave promise and are being given further study. In August, the Central Bank of Argentina approved the total amount of exchange neces sary for the rehabilitation program for the ihine and mill, and have agreed to issue the exchange permits when all requisitions are in the bank's hands. Aguilar has now complied with this requirement. 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Operations of Sulfacid, S.A., were geared to the tonnage of sulphuric acid which could be sold, supporting about half capacity. A modest profit is anticipated. The administration and operating organization of SuJfacid are excellent. We are looking for ways in which to put this talent into productive effort in other or similar ^e^8. Handicapped by a low volume of sales, mounting stocks of metal, bad labor relations and shortage of spare parts, Compania Metalurgica Austral suffered an unprofitable year. A change in management was effected late in the year, and a program of reorganization has been started, c Stockholders The number of St. Joseph Lead Company stockholders of record on December 31 of each year since 1944, and a classification of their holdings, are as follows: A TEN-YEAR RECORD OF STOCKHOLDER CLASSIFICATION Year 1944.......... .... 1945. ... .. . 1946.......... .. .. 1947 .... . . . 1948.......... .. . 1949. ... . . . 1950.......... . . 1951 .. .. .. . . 1952.......... .. 1953 . . .. Total 7,432 7,434 7,581 7,885 7,823 7,993 8,435 9,023 10,182 10,657 19 or lens ^ 1,812 1,766 1,778 1,834 1,834 1,847 1,794 1,907 2,146 2,257 20-99 , 100-199 2,797 2,772 2,865 3,021 3,135 3,123 3,443 3,705 4,235 4,424 1,586 1,639 1,641 1,735 1,611 1,747 1,943 2,076 2,346 2,485 200-Over 1,237 1,267 1,297 1,295 1,243 1,276 1,255 1,335 1,455 1,491 President's Report to Employees A copy of this Report for the year 1953 is enclosed, as it contains photographs of our opera tions and emphasizes the desirability of maintaining high efficiency. Four representative St. Joe advertisements, two for lead and two for zinc, have been reprinted to stress the importance of selling our products. Conclusion We wish to express our sincere appreciation to all our employees for their loyal and efficient efforts during the past year and for the continued support of our stockholders. Clinton H. Crane Chairman Andrew Fletcher ; President New York, March 17, 1954 8 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST JOSEPH LEAD COMPANI AND SUBSIDIARIES Summaries of Consolidated, Income For the Years Ended December SI, 1953 and 1953 Net Sales of Metals, Metal Products, Etc..................... Cost Thereof (exclusive of depreciation and depletion) .. Gross Profit from Operations Before Depreciation and Depletion Deduct: Selling, general and administrative expenses . .. Exploration: New mine examination and development expenses Oil and natural gas expenses, net , ... . ....... Past service annuities (Note 5) ..................................... $1,324,933 596,352 825,819 195,650 Net Profit from Operations Before Depreciation and Depletion Other Income: Dividends: The New Jersey Zinc Company . ...... Mine La Motte Corporation (Note 3) . ...... . Compania Minera Aguilar, S. A................................. Other dividends, interest, etc. less charges ...... Items previously expensed, capitalized by agreement with the Internal Revenue Service.......................... $ 536,260 360,000 .-- 336,466 204,687 Deduct: Depreciation of plant and equipment (Note 7A) . Depletion of mines . ... , $1,689,237 226,865 Provision for Taxes on Income: Federal normal tax and surtax Federal excess profits tax (Refund) .. . Federal income taxes--deferred--related to accelerated amortization of emergency facilities (Note 7A) .................................................................................. State income taxes ... . $4,199,581 (54,017) 138,204 60,965 Net Income tor tmr Year.................................... ................... Earned Per Share on the 2,716,222 Shares Outstanding ..... ... 1953 $88,002,426 74,035,998 $13,966,428 2,942,654 $11,023,774 1,437,403 $12,461,177 1,816,102 $10,645,075 4,344,733 $ 6,300,342 $2.32 Summaries of Consolidated Earned Surplus For the Years Ended December SI, 1953 and 1952 $1,584,016 985,984 1,298,811 195,550 1952 $105,211,886 85,855,464 $ 19,356,422 4,064,361 $ 15,292,061 $ 585,000 360,000 69,874 493,328 151,784 $1,485,122 160,576 $5,433,202 152,060 1,659,986 $ 16,952,047 1,645,698 $ 15,306,349 82,632 5,667,894 $ 9,638,455 $3.55 V; Earned Surplus at Beginning of the Year .. . Net Income for the Year........................................ ... . Reserve for Contingencies and Reserve for Deferred Prospecting, Development, and Exploration Restored to Earned Surplus .. Deduct: Cash dividends paid during the year.............. Stock dividend paid during the year .......... Earned Surplus at End of the Year.............. $7,468,290 .-- ... . 1953 $17,403,855 6,300,342 1,283,000 $24,987,197 7,468,290 $17,518,907 $7,776,373 9,382,291 The accompanying notes to financial statements are an integral part of the above summaries. 1952 $ 24,924,064 9,638,455 $ 34,562,519 17,158,664 $17,403,855 9 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31,1953 and 1952 ASSETS Current Assets: Cash ............ .......................................... U. S. Government securities.............................. . . Accounts receivable--trade...................................... U. S. Government--claims for income tax refunds Other accounts receivable ........................................ Inventories (valuation not in excess of market)-- (Note 1): Finished lead, zinc, etc............................................ Lead, zinc, etc., in process and concentrates----Materials and supplies (less reserve for slow- moving items--1953, $92,964; 1952, $127,586) Advances: Compania Minera Aguilar, S. A....................... .. Sulfaeid, S. A. Industrial................................ ... Compania Metalurgica Austral-Argentina, S. A, Commercial ............................................................ Investments: Compania Minera Aguilar, S. A. (at nominal valuation--99.9% owned, not consolidated)-- (Note 2) .............................................................. Mine La Motte Corporation (at nominal valua tion--50% owned)--(Note 3).............................. The New Jersey Zinc Company (195,000 shares at cost, less non-taxable dividends--9.9% owned) Brunswick Mining and Smelting Corporation Limited (1,600,000 shares at cost--40% owned) --(Note 7D) ........................................................... 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 . . Less allowance for depletion................ ;. ... Appreciation arising from revaluation subse quent to March 1, 1913 ........................... 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........................ Total capital assets, net . . . .... Miscellaneous Assets--U. S. Treasury, State and Municipal securities on deposit with Federal and State departments (at amortized cost) ............. Deferred Charges: Oil and natural gas expenditures in suspense .... Deferred past service annuities (Note 5) ............ Deferred exploration expenses ........................ Other deferred charges .................................... Total . ................... ... December 31,1953 $ 4,621,291 10,000,000 4,120,238 441,718 228,208 6,267,705 3,178,316 6,604,829 $34,262,305 $ 55,374 644 31,300 87,318 $1 1 11,161,854 2,342,163 963,825 14,467,844 $13,500,000 13,500,000 $ 3,500,000 3,500,000 $21,610,956 18,968,952 $45,619,701 27,279,318 2,642,004 18,340,383 $20,982,387 $ 91,716 1,042,036 699.952 287.953 826,209 2,121,657 $72,747,720 December 31,195S $ 5,434,402 21,880,000 6,092,035 264,393 539,163 2,923,848 2,715,367 5,144,058 $44,993,266 $ 181,600 636 25,946 208,182 11 1 11,161,854 690,956 11,852,812 $13,500,000 13,500,000 $ 3,500,000 3,500,000 $21,482,188 18,742,086 $41,140,014 25,853,813 . ... - 2,740,102 15,286,201 $18,026,303 $ 515,542 1,237,586 640,482 85,678 827,895 2,479,288 $78,387,746 The accompanying notes to financial statements are an integral part of the above balance sheets. 10 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND SUBSIDIARIES Consolidated Balance Sheets, December 31, 1953 and 1952 Current Liabilities: Accounts payable .... .................................... Wages payable ............................................................ Accrued taxes: Federal income and excess profits (Note 6)___ Other........................................................................... Deferred Credits; Deferred Federal income taxes--related to accele rated amortization of emergency facilities (Note 7A).......................................................................... ... Deferred income from services, etc.--Compania Minera Aguilar, S. A.............................................. Reserves; Injury claims and workmen's liability insurance . Employees' life insurance and retirement .......... Excess cost of replacing inventories...................... Capital Stock and Surplus: Capital Stock: Authorized, 5,000,000 shares of $10.00 each Issued, 2,737,636.85 shares ............ Less in treasury, 21,413.95 ... .. . .. Outstanding, 2,716,222.9 shares.......................... Surplus: Earned .......................................................................... Capital ........ ........................................................ Reserves: Deferred prospecting, development, and explora tion ................................ ................................... ... Contingencies ...................................................... ... Total Capital Stock and Surplus .... December SI, 195S $ 4,146,897 291,678 4,126,386 284,166 | 8,849,127 $ 138,204 $ 626,137 396,625 138,204 922,762 $50,000,000 $27,376,369 214,140 $17,518,907 18,156,491 27,162,229 35,675,398 $62,837,627 LIABILITIES December SI, 1952 $ 5,887,345 494,393 6,421,920 396,283 $13,199,941 $-- 265,804 $ 471,162 389,022 66,242 265,804 916,426 $50,000,000 $27,376,369 214,140 $17,403,855 18,156,491 27,162,229 483.000 800.000 36,843,346 $64,005,575 Total ........................................................ $72,747,720 $78,387,746 The accompanying notes to financial statements are an integral part of the above balance sheets. 11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST, JOSEPH LEAD COMPANY AND -SUBSIDIARIES Notes to Financial Statements 1. Inventories of lead, zinc, etc. (finished, in process, and concentrates) are valued at cost deter mined substantially on last-in, first-out (LIFO) method, exclusive of depreciation and depletion. Materials and supplies are valued at average cost. 2. The transfer of funds from Argentina is subject to restriction. It is the practice of the Com pany to record dividends received or receivable from Compania Minera Aguilar, S. A. as they are converted into U. S. dollars, of which pesos 991,728 (U. S. $69,874) was so converted in 1952. Accordingly, the financial statements of St. Joseph Lead Company and subsidiaries do not include dividends of Compania Minera Aguilar, S. A. not so converted as follows: In bank in Argentina......................................................................... Invested: Compania Metalurgica Austral-Argentina, S. A. Commercial: Bonds ............................................... ....................................... Capital stock (1953, 40.5% owned; 1952, 40.5% owned) ... Sulfacid, S. A. Industrial--Capital stock (28.6% owned)----- Due from Compania Minera Aguilar, S. A.--Dividends declared not paid ............................................... ................... ....................... Argentine paper pesos December SI 1953 1952 1,983,749 983,749 2,000,000 9,720,000 8,240,000 31,361,313 3,000,000 8,100,000 8,240,000 15,509,721 Total............ ................................... ............. 53,305,062 35,833,470 Financial statements of Compania Minera Aguilar, S. A. are included herein on pages 14-16. 3. The Company's equity in the net assets of Mine La Motte Corporation, as shown by audited financial statements, was $296,131 and $398,877 at December 31, 1953 and 1952, respec tively. The dividends received from Mine La Motte Corporation in each of the years 1953 and 1952 ($360,000) exceeded the Company's equity in the net income of those respective years by $102,746 and $5,446. 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 has a Retirement Plan for Salaried Employees and a Pension Plan for Payroll Employees, both of which are non-contributovy. All past service costs have been funded. Cur rent annual costs of both plans aggregated approximately $424,000 and $462,000 in 1953 and 1952, respectively. It is the practice of the Company to defer past service annuity cost pay ments in amounts equivalent to the estimated future tax reductions resulting therefrom. 6. The Federal income and excess profits tax returns of St. Joseph Lead Company and subsidiaries have been examined by the Internal Revenue Service through the year ended December 31, 1950 and all assessments and adjustments have been settled. Examination of returns filed for the years 1951 and 1952, is now in progress, and in connection therewith, certain tentative adjustments have been accepted and are reflected in the financial statements. 7. Reference is made to the text of this report relative to the following: A--Amortization of property covered by Certificates of Necessity and deferred Federal income taxes related thereto. (See earnings and taxes.) B--The companies' construction and expansion program. C--Anti-Trust suit. D--Commitment as to loan to Brunswick Mining and Smelting Corporation Limited. (See Foreign Exploration.) 12 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS 250 PARK AVENUE 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 subsidiaries as of December 31,1953 and the related sum maries 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 summaries of consolidated income and earned surplus, with the notes to financial statements, present fairly the financial position of St. Joseph Lead Company and its subsidiaries at December 31, 1953 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied (except for the change, which we approve, referred to in Note 7A to the financial statements) on a basis consistent with that of the preceding year. New York, February 27, 1954 HASKINS & SELLS 13 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINB.RA AGUILAR, S. A. Balance Sheets, December 32, 1953 and 1952 ASSETS Current Assets: Cash................ ............................................................ .. Marketable securities--at cost: Argentine Government...................................... Other (less reserve 3,300,000).......................... Accounts receivable--trade (less reserve--1953, 4,111,400; 1952, 2,281,800) .................................... Due from partly-owned company--trade.............. Other accounts receivable, etc.................................... Inventories: Lead and zinc concentrates (at average cost, or less, exclusive of depreciation and depletion --valuation not in excess of market) .... -- Materials and supplies (at average cost or less) Investments (Note 2): Sulfacid, S. A. Industrial (at cost--1953 and 1952, 21.4% owned) .................................................... Compania Metalurgica Austral-Argentina, S. A. Commercial (at cost--1953, 2.8% owned; 1952, 2% owned) ........................................................... Capital Assets (Notes 3 and 4): Mining properties and mineral rights: Cost, Including exploration and development prior to the commencement of operations . .. Less allowance for depletion............................ Appreciation arising from valuation in 1935... Less alowance for depletion.............................. Total mining properties and mineral rights, net ............................................ Land, buildings, plant and equipment (at cost)... Less allowance for depreciation ...................... Total capital assets, net.......................... Deferred Charges ........................................................ December SI, 195S Argentine paper pesos (Note 1) 39,548,816 17,747,948 7,544,464 16,018,850 31,261,907 1,582,493 30,281,739 19,616,451 163,602,668 6,157,000 676,000 6,833,000 4,384,038 3,602,941 49,446,736 39,700,779 29,681,777 13,234,603 881,097 9,745,957 10,627,054 16,447,174 27,074,228 3,601,366 December 81,1952 Argentine paper pesos (Notel) 10,298,731 7,608,664 6,628,590 12,990,698 22,233,527 1,746,405 26,373,053 20,573,156 108,452,814 6,157,000 396,000 6,563,000 4,384,038 3,502,941 49,446,736 39,700,779 25,073,008 11,897,325 881,097 9,745,957 10,627,054 13,175,683 23,802,737 3,629,057 Total 201,171,261 142,487,608 Notes: (1) The financial statements have been prepared in Argentine paper pesos instead of U. S. dollars because of current exchange restrictions. At December 31, 1953 arid 1952, the quoted free rate of exchange for a peso was approximately 7 cents. (2) The Company was contingently liable at December 31, 1953 and 1962 for subscriptions to additional shares of capital stocks amounting to pesos 900,000. (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. 14 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINERA AGUILAR, S. A. Balance Sheets, December 31, 1953 and 1952 LIABILITIES Current Liabilities: Accounts payable--trade , . . ....................... Due to St, Joseph Lead Company (including dividends payable --1963, 31,361,313; 1962, ' 15^09,721) ............... . ..................................... Due to partly-owned company ................................ Wages payable ....................................... . ...... .. Accrued Argentine income and other taxes........ .. Other accounts payable.............................. .., December SI, 195$ Argentine paper pesos (Note 1) 3,897,494 32,070,796 4,618,054 2,198,647 26,366,331 1,489,620 70,640,942 December SI, 1952 Argentine paper pesos (Note 1) 701,720 17,989,464 8,070,395 1,869,825 18,609,618 1,419,762 48,560,784 Deferred Credits: Deferred sales, etc........................................................ Reserves: Replacement and rehabilitation of capital assets (Note 4)................ ................................................... Employees' compensation under Argentine social laws ........................................................................... Accidents..................................................................... Other expenses . . ................................ 38,303,011 6,689,638 1,263,683 6,767,104 53,023,436 25,516,329 3,128,371 820,411 1,075,013 120,661 30,540,124 Capital Stock and Surplus: Capital Stock: Authorized and issued--500,000 shares of a nominal value of 80 Argentine paper pesos each............................................................... Less in treasury, 35,000 shares.................. 40,000,000 2,800,000 40,000,000 2,800,000 Outstanding 465,000 shares.................................. 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 Capital Stock and Surplus .. . Total ........................................................ 2,800,000 1,346,022 34,714,125 37,200,000 1,446,736 38,860,147 77,506,883 201,171,261 37,200,000 1,446,736 2,800,000 958,757 20,810,646 24,569,403 63,216,139 142,437,608 Notes Continued: (4) Ore reserves have been estimated by the directors to exceed appreciably those indicated by former sur veys. Had depletion been provided for units sold in each of the years 1963 and 1952 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 260,000 and 230,000, respectively, an net income for both years would have been correspondingly less. However, no depletion was provided in either year, or m 1951, as the amounts thereof were not considered to be material. A special appropriation of 12,786,682 Argentine paper pesos for replacement and rehabilitation of capital assets has been made out of income for the year 1953. A similar charge amounting to 12,758,164 was made against income in each of the preceding two years. (5) The net profit since beginning operations, pesos 92,496,647 (earned surplus at December 31, 1953 pesos 38,860,147 plus dividends declared pesos 60,031,500 and less aggregate deficits transferred to capital surplus pesos 6,895,000) represents aggregate net profits of pesos 132,197,426 (after deducting depletion computed on cost and special appropriations for replacement and rehabilitation of capital assets) against which has been charged deple tion computed on appreciation aggregating pesos 39,700,779. 15 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINEEA AGUILAR, S. A. Summaries of Income For the Years Ended December 31, 1953 and 1952 1953 Argentine paper pesos (Note 1) Net Sales of Lead and Zinc Concentrates, Etc............................. 118,832,414 Cost Thereof (exclusive of depreciation and depletion)...... ........... 33,452,552 Gross Profit from Operations before Depreciation and deple tion ............................................................. ....................... ...... ........... Deduct: Selling, general and administrative expenses.. . Taxes, other than taxes on income........................ Provision for doubtful accounts receivable.......... 2,378,248 5,101,555 1,829,600 85,379,862 9,304,403 Net Profit from Operations before Depreciation and Depletion Income Credits : Interest (including interest from partly-owned companies--1953, 1,650,724; 1952, 1,243,901) Other........................................................................... 1,896,828 1,299,194 76,075,459 3,196,022 Income Charges: Provision for depreciation of marketable securi ties ........................................................................... Other........................................................................... -- 63,681 79,271,481 53,681 Depreciation of Plant and Equipment (Note 2). ...................... 79,217,800 1,337,278 Provision for Argentine Income and Excess Profits Taxes .... 77,880,622 32,203,096 Net Income for the Year before Special Appropriation for Replacement and Rehabilitation of Capital Assets. ........... Special Appropriation for Replacement and Rehabilitation of Capital Assets (Note 2)................................................................... 45,677,426 12,786,682 Net Income for the Year, Less Special Appropriation. .... . 32,890,744 1952 Argentine paper pesos (Note 1) 87,352,445 25,085,221 62,267,224 2,062,752 3,669,397 2,281,800 8,013,949 64,253,275 1,475,718 623,286 2,800,000 43,476 2,099,004 56,352,279 2,843,476 53,508,803 1,184,906 52,323,897 20,300,000 32,023,897 12,758,164 19,265,733 Summaries of Unappropriated Earned Surplus For the Years Ended December SI , 1953 and 1952 Sunpr.iiR at Rectnntng of the Year.......................... 1953 Argentine paper pesos (Note 1) .......... 20,810,646 Add--Net Income for the Year, Less Special Appropriation . 32,890,744 Total ............................................................................. jjeduct: Dividends declared or paid during the year . Appropriation to statutory reserve... ..... 18,600,000 387,265 53,701,390 18,987,265 Surplus at End of the Year (after charging deficits aggregating pesos 6,395,000 against capital surplus)... ........ ........... 34,714,125 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, 16 " ' 1952 Argentine paper pesos (Note 1) 18,403,575 19,205,733 37,669,308 16,607,500 351,162 16,858,662 20,810,646 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS 8c SELLS CERTIFIED PUBLIC ACCOUNTANTS 250 PARK AVENUE NEW YORK ACCOUNTANTS7 C E R T IF IC A T E 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, 1953 and the related summaries 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. A special appropriation of 12,786,682 Argentine paper pesos for replacement and rehabilitation of capital assets has been made out of income for the year. Officers of the Company explain that lack of dollar exchange has prevented acquisition of necessary equipment and supplies for adequate replacement and maintenance, with the result that related expense accounts and net income have not been burdened with amounts which otherwise would have been charged thereagainst. In our opinion accepted accounting principles require that charges for maintenance be made against income only in the year of expenditure or other definite deter mination, and that charges for major replacements be capitalized. A simi lar charge amounting to 12,758,164 Argentine paper pesos was made against income in each of the preeeeding two years. In our opinion, except as described in the preceding paragraphs the accompanying balance sheet and summaries of income and unappropriated earned surplus, with the footnotes thereon, present fairly the financial position of Compania Minera Aguilar, S. A. at December 31, 1953 and the results of its operations for the year then ended, in conformity with gen erally accepted accounting principles applied on a basis consistent with that of the preceding year. New York, February 17, 1954 HASKINS & SELLS j Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. PRESIDENT'S : D1%CC tDr VO#-Dl% T' -. ;" :>-: TO THE EMPLOYEES ST. JOSEPH LEAD COMPANY AND SUBSIDIARIIS 1953 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The new Indian Creek Mill, Missouri PRESIDENT'S REPORT To all St, Joe Employees and their Families: In the opening paragraphs of my 1952 Report to you, I said: "The lead and zinc markets in 1952 were excellent examples of inept government efforts to stabilize markets in an international commodity. It will be recalled that upon the outbreak of the Korean War, the United States Government established ceiling prices for both metals--a procedure not generally followed by other countries, where much higher prices prevailed. The effect was the creation in 1951 of an artificial domestic short age, and unnecessary accumulation in the European markets. In my last report to you, I said: `Before long we must anticipate a return to international competitive markets, and at that time we should be in such an advantageous position that, come what may, the continuity of our operations will be assured. Curtailment of production, because of non-competitive costs, and resultant lower employment are tragedies we must seek to avert.' Present prices for lead and zinc indicate that foreign imports, plus domestic produc tion, are in excess of consumption demands." The correctness of these statements was unfortunately very evident in 1953, COVER PICTURE "Safety First" Inspecting a mine pillar from a caterpillar-mounted extension ladder. We witnessed the results of the previous Administration's ill-advised over-stimulation of lead and zinc production, not only in this country but throughout the free world. The truce in Korea merely hastened the time when the folly of this policy was clear to all. The deriiarid and consumption of lead and zinc in the United States during the last two years have been excellent. Prices, how ever, (have been forced down by March 1, 1954 to the disastrous levels of 9.25 ceri|s per pound for zinc and 12.5 cents per pound for lead by continued imports of unneeded metal, as shown by the following comparative figures: Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 oI { I ? i Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. i\'nr office, Hcrnthiuchdi, Mmnoin'i The U. S. Government purchased very much less lead and zinc for stockpiling purposes in 1953 than in 1952. The flood of imports has recently lessened but only, at the cost of lowering U. S. prices to a point where few domestic mines can operate at a profit. The seriousness of the situation is realized by many members of Congress and local consumers--as well as by the miners. At the beginning of 1954, the unsold stocks in the hands of domestic producers have reached the very high levels of approximately 81,000 tons of pig lead and 181,000 tons of slab zinc, but fortunately stocks in the hands of consumers are at a minimum. Advertisements Four representative St. Joe advertisements, two for lead and two for zinc, are included in this Report to emphasize that untler present conditions, it is just as important to sell our products as to produce them. Reproduced with permission of the copyright owner Further reproduction prohibited without permission. ^ For reliability of supply and unquestioned quality -- ;V SPECIFY DOMESTIC ZINC *?} -0;^ / 'y. .;;i U.S. ZINC CONSUMERS... which would you prefer? A bruf study of these curves showing domestic slab zinc pro* duct urn m its relation to imports reveal* same facts of interest to every consumer In periods nf greatest nece*i>?>, imports of rmc are at their Jtmist, us hr txample m 1948 and 1951 Conversely, when there iv an abundant supply, imports are ot , thi ir highest level As a result, prices decline and domestic zinc production is discouraged -production nfuth ma> be vitally needed on scry short nqhcc As a matter of fact, the alternate withholding ami flooding of the domestic market with foreign unc has bten responsible for some n! the wide fluctuations m the domestic price which is so disturbing to the American consumer The price concessions offered by importers in easy markets rarely oflsct the premiums or inconvenience* caused by lack of availability of the same mu.d m tight markets Furthermore, many grades of imported zinc /ire not comparable in quality to primary domestic brands produced to A STM specifications. In other words, it is nut a quotum of dollars and cents alone. 'fmr.rcUtitiility of supply 'onef. /K(Oeionccl qualify 7 v sPfCfir ooiviisnc zinc ST. JOSEPH LEAD COMPANY )io ,a,k avenue. new von* iy, n r. * SI JOE tl.il.olko.m,! yiNC A major factor in domestic zinc sup ply is the St. Joseph Lead Company's electrothermic smelter at Josephtown, Pa. Constructed in 1930, the smelter's annual slab zinc production is now in excess of 100,000 tons and--based on the current expansion program --will continue to rise. This steady growth of production is the direct result of two factors: 1--The strategic location of the plant to major consuming centers. 2 --The consumers' confidence in the quality of St. Joe Zinc and the integrity of the producer in dealing with his customers. ST. JOSEPH LEAD COMPANY 250 Park Avenue New York 17, N.Y. HIGH GRADE INTERMEDIATE The above recently appeared as a full page ad in a number of national trade publications. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.  the Imperishable Metal number 4 of a s@r^s pi AN ACTUAL, UNRETOUCHED PHOTOGRAPH 2 years after using a low-grade paint 2 years after using white-lead paint ?k!HT/H6 PRoBlS/f? QUESTION Whafs wrong with the paint-job on the left? ANSWER Little or no white lead in iti During the war, :feod was restricted in use for paint Post-war industrial demand created shortages of the metal, but today: LEAD, the imperishable metal is how available to provide durability in your paint Do not forget that 80% of the cost of painting a building is labor and it is cheaper in the long run to buy a paint that lasts and even years later offers excellent repaint surfaces. (t,,t4ihtnrgu -mti '"ST,: JOSEPH PARK AVE., NEW- YORK 17, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Balmat, Northern New York Earning Reflecting the very much lower nietal prices, sales for 1953, including Bunker Hill lead and zinc sold on a commission basis, amounted to $88 million, in comparison with $105 million in 1952 and $111 million in 1951. Earnings after taxes Were equivalent to $2,32 per share, in comparison with $3.55 per share in 1952 and $5.00 in 1951. Taxes amounted to $1.60, $2.09 and $5.09 per share, respectively, for each of the three years. Stockholders received divi dends of $2.75 per share in 1953, in comparison with $3.00 per share in 1952 and $3.25 per share in 1951, Additional financial and other information is given in the 90th Annual Report to Stock holders, and you are again urged to ask your Division Manager for a copy, if you are inter ested and are not a stockholder. St. Joe Product ion (in short tons) Lead concentrates from St. Joe properties Pig lead equivalent of St. Joe concentrates Pig lead produced (inch lead in purchased concentrates) Zinc concentrates from St. Joe properties Zinc (slab zinc equivalent, inch zinc in purchased concentrates) * Including nietal from toll concentrates 1 160,625 102,865 130,430 104,744 121,592* 8,204 tnr>> 157,037 100,592 128,691 69,173 108,959* 8,097 St. Joe Sales from Smelter Production (in short tons) Pig lead sales Slab zinc equivalent of oxide and metal : Not including toll zinc deliveries. . 122,062 103,009* 125,718 89,414* Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. New Zinc Fnmiuy unit, Monudfiin'Uc, West. Virginia OPERATING INFORMATION Lead Belt, Missouri The average tonnage of ore and chat milled per operating day was 26,695. The 13 per cent reduction in operating cost per ton of ore mined and milled is encouraging. In Southeast l Missouri the new Indian Creek Mill was dedicated on October 7, 1953; operations may not be increased from the present average of 500 tons of ore per day to 2,000 until the latter part of 1954 or early 1955, when the new ventilation shaft and 1,900-foot drift will have been com pleted. Herculaneum, Missouri At Herculaneum, the new office has been finished. During 1954 the fifth new sintering unit, as well as the bughouse, will be completed. Capacity will then be approximately 100,000 tons of lead a year. The probability of operating with two blast furnaces for a major portion of the year, should be a great help in stabilizing employment. Some progress was made in the rebuilding of the zinc slag furnace, but completion is not expected until the latter part of 1954. . ;, , ' At the end of the year the tonnage of unsold pig lead at Herculaneum and at Alton for the account of the Company, amounted to 12,875, which is in addition to the 10,509 tons of lead in concentrates, , Balmat-Ed wards, Northern New York With the first full year's production Using the increased capacity of the Balmat mill, a record output of approximately 100,000 tons of zinc concentrates was obtained at this Divi sion. Joseph town, Pennsylvania The outstanding output of 121,265 tons of slab zinc equivalent was obtained as a result of even further improvements in recoveries of the electric furnaces and condensers, and be cause of the installed increased capacity. As the unsold inventory of slab zinc amounted to 21,088 tons at the end of the year, it was necessary1 to curtail the output from the OctoberNovember record of an average 300 tons per day to 200 effective February 1, 1954. Oil ' Three producing wells were drilled in the 4,542-acre block in Crockett County, Texas, in which St. Joe has a 50% interest; In Roosevelt County, Montana, the two wells were shut down as not being commercial under existing conditions; additional acreage has been leased in order to round out the 6,000-acre block. We expect to continue the oil exploration program, but at a considerably less expenditure than in 1953. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. consume. To destroy gradually as by burning etc., or by using up, wearing out Source: "Accumulation & Conservation of Metals in Use," a paper by Charles W. Merrill, U. S. Bureau of Mines. THE imperishable nature of lead, the most dur able of the common metals, makes the descriptive term "consumer" an anomaly when applied to many users of this versatile metal. In the case of some of its most important applications, it may be said that the metal is "on loan" for varying periods of time to do a specific job, after which it is re claimed and resold to perform its useful work again. For example, as the graph shown here indi cates, the largest amount of lead used in the United States -- about 34 lbs. out of every 100 -- goes into storage batteries, where its unique electrochemical properties make it an indispens able component At the same time, the metal's imperviousness to the corrosive attack of sulfuric acid makes storage batteries the country's chief source of secondary lead. Approximately 80% of the lead used in the manufacture of storage bat teries returns to the market within a period of between two to three years. Since lead is practically immune to attack by universally encountered corrosive agents, such as the atmosphere, soil, sea water, as well as many highly corrosive liquids -- principally sulfuric acid -- it has the highest recurrent-use-factor among the common metals. Using the figures on the graph as a base, the optimum recovery of lead from all uses averages 60%. This means that of the more than 1,000,000 tons of lead used annu ally in the United States; about 600,000 tons can be reclaimed and sold for reuse at the highest relative proportion of the primary price of any of the common metals. No better testimony would be required to jus tify naming lead "The Imperishable Metal." ^ ST. JOSEPH LEAD COMPANY , . ' ' ' The Largest Producer of Lend in the United States-- 250 PARK AVENUE, NEW YORK CITY 17, NEW YORK Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Spect ror/raph, Joseph town Research Laboratory, Pennsylvania Foreign Operations The Aguilar mine and mill, located in northern Argentina, produced 19,768 metric tons of lead concentrates and 31,797 metric tons of zinc concentrates in 1953, in comparison with 23,064 and 30,366 in 1952, respectively. Earnings amounted to approximately 33 million pesos after setting up reserves for plant and rehabilitation of 14 million and 32 million taxes, which is equivalent to around 1.65 million U. S. dollars at an exchange rate of 5 U. S. cents per peso. St. Joe received no income in 1953 from this operation, because of continuing govern mental exchange restrictions. The comparative earnings, after reserves and taxes in 1952, were approximately 19 million pesos. The sulphuric acid and fertilizer plant at Borghi, Argentina, in which St Joe-Aguilar own a 50% interest, continued to show Very satisfactory operating efficiency, but earnings were nominal due to low sales. An extensive reorganization of staff and operating procedure was found necessary at the Comodoro Rivadavia zinc smelter in southern Argentina. St. Joe-Aguilar have a 43% ownership in this plant. It is hoped that with the improved conditions in that country, coupled with the supervision of the Borghi staff, the results in 1954 will be greatly improved. The Nord Africaine mine, situated in Algeria just over the border from Morocco, oper ated at approximately 400 tons of lead-zinc ore per day, with satisfactory earnings, which were used to reduce debt. St. Joe has an approximate 17*/;% ownership in this operation. The Leadridge Mining Company Limited, a wholly-owned St. Joe Canadian subsidiary, consolidated its interests in the Bathurst area of New Brunswick, Canada, with the Bruns wick Mining and Smelting Corporation Limited, Anacon Lead Mines Limited, and certain of the M. J. Boylen interests through the exchange of properties for shares of the Brunswick Mining and Smelting Corporation Limited. Leadridge now owns 40% of the issued capital stock of Brunswick, and will take an active part in the handling of these extensive ore re serves. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1954 OUTLOOK With world production of lead and zinc being greater than consumption, with foreign* mining costs being less than domestic, and with the large tonnage of unsold metal in the hands of U. S. producers, it is doubtful if we can expect much higher prices in our local markets, unless the Administration or Congress is willing to stem the tide of unneedeci imports. In the last six months many domestic consumers have realized that for their own good, as well as for the protection of our Nation, it is inadvisable to depend on foreign sources for most of their requirements. I am hopeful that in 1954 a solution will be found for maintaining an output from domestic mines at approximately the level that existed prior to 1952. In the meanwhile, however, the safe course for us in St. Joe to follow is Continue to increase our operating efficiency. We have been in the mining business for 90 years and have successfully survived difficult times in the past. The experience so gained can now be used to good advantage. Fortunately, our mines, mills and smelters are in excellent physical condition since the modernization and expansion programs undertaken at all Divisions have now been practically completed. We employees can be grateful to the stockholders for the excellent "tools" that have been made available during the past seven years, because of the additional $26 million capital investment in our United States properties. Fortunately, also, our management staff is a well-balanced group of "old-timers" with low metal price experience, and younger men with enthusiasm ancl new ideas. I do not believe that our country is facing a serious depression. We are in a period of readjustment, the earlier completion of which was forestalled by the Korean War. Given a chance, the enterprise, courage and vision of our people will surmount the immediate prob lems, ancl our Nation will continue to offer the freedom that each of us desires. New York, March 17, 1954. President. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. dTedsotime3 ..* thoxny b^s.c?- ,.-e3 ol edrenseArtxsn, oaaT.ooa~t-> Miab; sxa*)i 'fttfSt d oartAebnyssiniaa (~ .m- r_v..i,lrvA,,;. :^) the' of Mfyssmtaijil IS 2ttlC ioccn) "liatic, Iks., 4 -orto ci< tenici r? 4 ^ r s 'rof sruf*&*<" -'"v , ~ _^Ta.,<~o--uPs- I-I;7c- ,C,r0,o`^ctut o0vff .joirX.TJ^Xcr.ry. cf. _If abor.o Prbw ^jTwuisb white crystal- sa. \^^o. (250-^f ** is Prac^e8 Un|ymbol, Zn; at-^abtut 930 C. itb^'i temperatures. y g80 F.).. At. abou the oxide. Sp. 111.. . >WI*^1~W,,'J^`"JI*^^^ The average man probably knows little of the metal's wide application and its many useful functions. For zinc is frequently used in conjunction with other metals, and then its Identify may be more or less concealed. For example, the great volume of iron and steel products which are galvanized, i.e. zinc-coated, as protection against corrosion, has for many years accounted for the metal's largest single use. In brass, of which it is an essential constituent, the zinc is invisible. Zinc oxide, which is particu larly important as a paint pigment and as a rubber ingredient, is a white, fine powder which gives no hint of its rela tionship to the base product. Zinc alloy die castings which, incidentally, are now beginning to crowd galvanizing as the chief outlet for zinc, are frequently covered with a variety of beautiful finishes for purely decorative purposes. In galvanizing, the spangled appear ance of the zinc coating may also be decorative, but its chief purpose is to protect iron and steel products against corrosion. For this purpose, zinc is super ior to all other metals. According to the U.S. Bureau of Standards, zinc forms "by Far the best" protective metallic coating for the rust-proofing of iron and steel. Due to its low melting point, if is a com paratively simple matter to secure a tight bond between the zinc coating and the iron or steel base. Moreover, as iron stands below zinc in the electro-chemical series, a coating of zinc provides iron and steel with perfect electrolytic protec tion against rust. The electropositive metal, ZINC, suffers corrosion while pro tecting the electronegative metal, IRON. The effect is that corrosion goes on with the zinc exclusively; the iron is not cor roded provided any zinc is left on its sur face. It is because of these inherent properties that zinc takes precedence as the ideal protective agent for iron and steel products. ST. JOSEPH LEAD Company 250 PARK AVENUE, NEW YORK 17, N. Y. ELdorado 5 3200 ST. JOE ^keAmo HIGH grade MTERMEDMTE BmS mCUl * TME mnm Reproduced with permission of the copyright owner.. Further reproduction prohibited without permission.