Document J3G8EOrBby7XKgYL2xLGaNNpK

Saint Joseph Lead Company Annual Report -- 1963 America's Corporate Foundation; 1963; ProQuest Historical Annual Reports pg- 0 1 ., > : Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 963 ANNUAL REPORT St. Joseph Lead Company 250 PARK AVENUE, NF.W YORK 17, N. Y. CONTENTS HIGHLIGHTS LETTER TO THE STOCKHOLDERS ST. JOE'S FIRST CENTURY ST. JOE TODAY ST. JOE'S TOOLS AND TECHNIQUES ST, JOE TOMORROW EXECUTIVES 2 3 5 9 20 22 24 The 1964 Annual Meeting of the Stockholders will be held Monday, May 11, at the Park Lane Hotel, 48th Street and Park Avenue, New York, at 11:00 a.m. All Stockholders are cordially invited to attend. If you are unable to attend, please vote by proxy. A proxy and proxy statement will be mailed to you on or about April 10, 1964. Ore train makes its way through vast caverns created by decades of St. Joe mining operations in the Federal area. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HIGHLIGHTS 1963 Sales of metals, etc. .... .........<...................... ............ $75,598,525 U.S. and foreign income taxes........ .. ................................ $ 1,590,463 Net income (after taxes) and special credit -- 1962 .......... $ 9,903,773 Dividends paid: Cash ............................................... ................................ $ 3,763,404 Stock ............................................ ....... .................. .. -- Shares of capital stock outstanding ....................................... 3,028,217 Per share on capital stock: Taxes on income ............................................................... $0.53 Net earnings (and special credit -- 1962, $0.51) .......... $3.27 Dividends ....................................................... .................. $1.25 Current assets................................................................. .. $45,422,385 Current liabilities ................................................................. $11,352,128 Net current assets.................. .... ...7................................. $34,070,257 Ratio of current assets to current liabilities........................... 4.00 to 1 Long-term debt (excluding amounts in current liabilities) .. $17,095,240 Cash .................................................. .................................. $ 3,761,225 Short-term marketable securities ....................................... $21,344,579 Capital expenditures (excluding Meramec Mining Co.) ... $ 3,186,963 Number of employees.......... .............. ................................. 3,621 Number of stockholders....................................................... 8,772 Stockholders' investment in the business: Total ................................................................................. $91,795,960 Per share ............................. ....... .................. $30.31 1962 $67,981,883 $ 506,502 $ 4,319,873 $ 2,717,622 10% 2,989,382 $0.17 $1.44 $1.00 $46,823,524 $ 8,753,333 $38,070,191 5.35 to 1 $21,802,383 $ 4,269,022 $21,773,537 $ 3,750,014 3,774 8,986 $84,578,891 $28.29 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Chairman Andrew Fletcher (left) and President Francis Cameron. To the Stockholders: By the time you receive this Report, your Company will have entered upon its second century of business activity. The St. Joseph Lead Company was incorporated on March 25, 1864, and to mark its 100th anniversary we have expanded our Annual Report to give our shareholders and employees a broader picture of where we have been in that hundred years, where we are now, and where we- are heading in the next. This Report includes an illustrated history of St. Joe, descriptions of each of our principal operat ing properties, an outline of some of St. Joe's con tributions to mining and smelting technology, and an evaluation of our prospects for the future. A financial review is also enclosed in the inside back cover to give you the details of operations in 1963. As we celebrate our 100th anniversary, it is most gratifying to report that 1963 was a good year for your Company and that at this writing the outlook appears more favorable than it has for some years. Although 1963 began with a first quarter loss of 15 cents per share, we finished the year with earnings of $3.27 per share as compared with $1,44 per share in 1962. In 1963 sales of all prod ucts totaled $75,598,525 as against $67,981,883 for 1962. The cost of sales, at $57,932,666, was slightly lower in 1963 than in 1962. In Decem ber a dividend of 50 cents per share was paid. , ... 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. bringing the total 1963 dividend to $1.25 per share, as compared with the $1.00 paid in 1962. The earnings for 1963 reflected a rise in the price of both lead and zinc, as well as the settle ment on April 1, 1963 of a strike which had forced our lead mining and milling properties in Missouri to suspend operations on July 27, 1962. The 1963 earnings also reflected the change in our account ing practices, described to you in the 1962 Annual Report, under which we capitalize shaft sinking and development costs, reduced by amounts equal to the current tax reductions. The amounts so capi talized, and the excess which has been charged against current earnings, are shown in the financial supplement enclosed with this Report. We expect price stability and increasing de mand for both lead and zinc during 1964. The present demand for these metals both here and abroad comes partly as a result of improving stand ards of living throughout the world, and partly from recent technological developments which have broadened their industrial application; for example, automobile manufacturers are making increased use of zinc for die castings, trim, and galvanized protective coatings. St. Joe is currently engaged in an active program of research and market development to discover and develop newr and wider uses for lead and for zinc. Some of these projects are being carried out internally; others are being conducted in association with members of our industry. Concurrently, the Company is en gaged in a continuing program to increase the productivity of its mines, mills and smeltersi Since 1953 St. Joe has invested more than $90,000,000 to develop new mines and to build new facilities. This includes approximately $10,000,000 for exploration and land acquisition, largely in southeast Missouri, plus the normal plant expansion expenditures. Amounts spent on indi vidual properties were: Indian Creek mine and mill, $6,800,000; Viburnum mine and mill. $24,000,000; the power plant for the Josephtown smelter, $22,000,000; Meramec Mining Company (owned jointly with Bethlehem Steel Corporation), $26,000,000. During the next three years, additional ex penditures will approximate $23,000,000 for the following purposes: $11,500,000 to develop the new Fletcher mine and mill; $10,000,000 for an expansion and modernization program which will more than double the capacity of our lead smelter at Herculaneum; $700,000 to increase the capacity of the Edwards mine and mill from 410 to 600 tons of zinc ore per day; and $860,000 to increase the productive capacity of special high grade zinc at the Josephtown smelter from 2,200 tons to 3,700 tons per month. The section describing our principal opera tions, which begins on page 9 of this Report, con tains a more thorough discussion of each of these investments. By the end of 1966, the Company's annual productive capacity will be in excess of 200,000 tons of pig lead and 175,000 tons of zinc, including zinc oxide, of which 45,000 tons will be special high grade metal. These capacities will make St. Joe the largest domestic miner of lead, and one of the largest producers of zinc. By that time, Meramec Mining Company, which began production of iron pellets early in 1964, should also make an important contribution to our sales and earnings. The preceding paragraphs have highlighted some of the reasons why we are optimistic about the future of the Company. But one of our greatest reasons for optimism is the competence and en thusiasm of our employees. This is a fitting occa sion to acknowledge St. Joe's indebtedness to its many employees who have not only made St. Joe's first 100 years a success, but have helped to begin its second century so auspiciously. In addition, we extend deep appreciation for the support and loyalty of our stockholders. Sincerely, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. St. Joe's First Century 1864-1964 The story of St. Joe is something more than the story of a relentless and successful search for new mineral deposits, of findtng better ways of taking ore from the ground, of efficiently processing it into useful industrial materials, and ot developing new and larger markets for these commodities. The story of St. Joe is also the story of the men who began it and the men who guided it through the first century of its life. Up to the present, St, Joseph Lead Company has had just five Presidents. This section of the Report is con cerned principally with events which took place during the terms of office of the first three Presidents -- a period which covers most of the Company's first century. J. Wyman Jones served as President from Septem ber, 1865, soon after the Company came into existence, until October, 1904. His son, Dwight Arven Jones, was President from November, 1904, until Decembelr, 1913. The third President, Clinton Hoadley Crane, held the office from December, 1913, until May, 1947, but his connection with St. Joe as Chairman of the Board of Trustees (St. Joe's designation for what most corporations cal) the Board of Directors) continued until 1957. The first President was a New York lawyer who had the vision to see the possibilities in the remote diggings of St. Francois County m southeastern Missouri and the imagination and energy to build an organization that has become one of the great lead and zinc mining companies of the world. Lead had been mined in Missouri since the C. Site J. Wyman Jones, St. Joe's first President, served from 1865 until his death in 1904. time of the earliest French and Spanish explorers, but the output was not substantial until the St, Joseph Lead Company, incorporated under the laws of the State of New York, March 25, 1864, began its operations. More exactly, it might be said that the Missouri Lead Belt did not begin to fulfill its promise until J. Wyman Jones went put to the area' and saw for himself the tremendous pos sibilities which existed there. Mr. Jones's greatest contribution, and one of his earliest, was the introduction of the diamond drill into the region. Until then, Missouri mining men had literally no more than scratched the surface. Mr. Jones observed the diamond drill being used for marble prospecting near his Hudson Valley home in 1869 and urged that St. Joe adopt, it. A majority of the Board was not persuaded. Mr. Jopes and one Trustee, Hugh N. Camp, who was Treasurer, went ahead as individuals, personally financing the diamond-drill operations, and providing the momen tum that was to carry the Company steadily on through the years ahead. ; In 1874, with production at 140 tons of lead per month, the first dividend was declared. By 1876 St, Joe was no longer an obscure operation in a little known The tool that opened the way. An early diamond drill powered by steam and drawn by mule team. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. In the early days it was all muscle -- hand drilling blast holes and hand shoveling broken ore. region; it was important enough to place an exhibit of its Bonne Terre mill at the Philadelphia Centennial Exposi tion. Three years later it joined with the Desloge Lead Company to build a railway to replace wagon transport for the twelve-mile haul to the St. Louis Iron Mountain and Southern Railroad. Dwight Arven Jones, the second President, occupied the office from November, 1904, to December, 1913. In 1883 the mill at Bonne Terre was completely destroyed by fire. It was replaced immediately by a new mill, with a capacity of 900 tons of ore per day, which was a great improvement on the old one. The new mill, which took only four months to build, cost $222,000. In 1883 the Company also made one of its most fortunate acquisitions, a tract of land named Penn Diggins which proved to contain a very rich deposit of lead. Penn Diggins soon made it possible not only to pay for the new mill, but to finance the building of another and longer railroad which connected the Lead Belt and the Mississippi River and thereby effected a drastic reduction in shipping costs. In 1886 St. Joe bought the Desloge Lead Company and in the same year Mr. Jones, with other Trustees, formed the Doe Run Lead Company which was subse quently to be absorbed by St. Joe. In 1890 St. Joe began construction of the large smelter at Herculaneum, to process concentrates from its Missouri properties. J. Wyman Jones died in 1904. He had raised St. Joseph Lead Company from an uncertain operation, producing only a little more than $17,000 worth of sal able goods in a year, to a company which during his thirty-nine years as President had distributed $ 1,774,000 in dividends, invested another $1,750,000 of its earnings in permanent improvements, and been responsible for creating a thriving community of 5,000 persons at the center of its operations in Missouri. When St. Joe's first President died, his son, Dwight A. Jones, who had been with the Company nine years as Secretary and Trustee, became President. Like his father, Dwight Jones came to St. Joe by way of the law. The problems confronting him were quite different from those that the founders had faced. The chief diffi culty was to maintain the Company's momentum. Dwight Jones overcame this obstacle with conspicuous success. He saw clearly that the Company would have to acquire new properties and build new plants to meet the rapidly changing conditions of the new century. This was not always easy. Aggressive new mining interests had come into southeastern Missouri, and St. Joe had to compete vigorously with them in its efforts to obtain title to land with ore-bearing potential. Between 1890 and the Panic of 1907, St. Joseph Lead Company spent or committed almost $10,000,000 for new land and plant equipment. Fortunately for the stability of the Company, it had been possible to make those larger expenditures and com mitments out of earnings, but the 1907 Panic set in motion forces that created new and hazardous problems for the industrial community generally, and St. Joe did not escape the effects. During the next four years St. Joe and Doe Run (then still a separate entity) ran up short-term debts totalling more than $8,000,000. Dissatisfaction was ex- Herculaneum was built to smelt lead concentrates from St. Joe mines in southeastern Missouri. 6 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Clinton Hoadiey Crane was the third man to hold the Presidency; he served in this office for thirty-four years. pressed vigorously by a minority of stockholders and St Joe became involved in litigation and controversy that, for a while, threatened its existence. In the end the dis pute was settled; a general reorganization was effected, the Doe Run Company was merged into St, Joe and the Company went ahead on an entirely new footing. In 1913, shortly after the final changes had been completed, Dwight Jones died. He had served the Company for eight een years, nine of them as President. The election of Clinton Crane to succeed Dwight Jones marked a distinctly new departure in St. Joe tradi tion. Unlike the Joneses, he had no background in the law. Moreover, his early interests were about as far re moved from lead mining as could be imagined: Clinton Crane's first love had been the art of designing and build ing yachts and other vessels. With his election to the St. Joe Board in 1911 -- to succeed his father -- he soon found himself totally ab sorbed in the challenges of the mining industry. First of all, in the position of Trustee, he was able to make an important contribution through the comprehensive knowl edge of engineering that he had acquired as a naval archi tect. He fully understood the principles of mechanical power and he saw how to apply them to St. Joe's needs in an era of increasing mechanization. He also had the same gifts as his predecessors -- the capacity to grasp important issues and the ability to select capable men and to weld them into an efficient organization. From the beginning the Company's top executives had paid frequent visits to its properties to get a first-hand view of operations. Mr. Crane also was insist ent on studying the problems for himself. He began by spending a long time in the Lead Belt, making detailed examinations of St. Joe's procedures as well as those of its competitors. Later he made extensive tours of mines and mills in Montana, Utah, and Arizona. By the end of 1915, two years after Mr. Crane had taken office, St. Joe had paid off practically all its debt. It was modernizing its methods, notably by introducing the flotation technique in its concentrating mills, effect ing substantial savings. It had established its own sales force, a far-reaching step which did much to fortify and extend the already high reputation enjoyed by St. Joe products throughout the United States, MAJOR ST. JOE PROPERTIES IN THE OLD AND NEW LEAD BELTS The orange shading on the map at the right shows the approximate area which comprises the old Lead 9//A Belt in southeastern Missouri. The map also locates many of the mines -- Bonne Terre, Desloge, Leadwood, Fed eral, Doe Run and Mine La Motte -- which have made impor tant contributions to St. Joseph Lead Company, indicates their relative importance, and lists the dates during which they were active producers of lead ore. y//// The yellow shading locates the newer Si, Joe lead y/yys properties, which lie to the west of the old Lead Belt, '77/A These include Indian Creek, Viburnum, and the new Fletcher mine in Reynolds County, which is currently under development and is due for production in 1966. The green shading locates the new iron mine and y/y plant of the Meramec Mining Company at Pea y//. Ridge, owned jointly by St. Joe and the Bethlehem Steel Corporation, which began production early in 1964. MADISON COUNTY Progress and expansion were steady throughout the years of World War I and the pre-Depression era. St. Joe acquired a number of mining properties in the Lead Belt, the most important of which was the Federal mine, purchased from the American Smelting and Refin ing Company in 1923. It expanded its underground rail system and consolidated these properties, including the Federal mine, into this network, which ultimately totalled more than 250 miles of narrow-gauge track, running under the towns of Flat River, Leadwood, Desloge, Rivermines, and Elvins. This system of subsurface transport resulted in greatly increased efficiency and large savings in costs. It eliminated expensive surface haulage, consoli dated maintenance of equipment, and centralized the work of hoisting ore above ground for milling and lower ing supplies to underground workings. Another important development during Mr. Crane's long administration was St. Joe's entry into the zinc field. The zinc smelter at Josephtown as it appeared in the early Thirties, shortly after it went into operation. The map shows the locations of the New York State zinc mines and of the zinc smelter in Pennsylvania. In 1947, Mr. Crane was succeeded as President by Andrew Fletcher, a mechanical engineer by training, who had been a Trustee of the Company since 1921, and who served since 1929 as Vice President and Treasurer. Mr. Crane continued as Chairman until 1957 when he was succeeded by Mr. Fletcher. At that time, Francis Cameron, a geologist and mining engineer by profession, who had joined the Company in 1945, became President. During the years following World War II, the Com pany was confronted by constantly increasing costs as well as lower grade ores in its mines in the old Lead Belt. Substantial economies were effected by closing installa tions which could no longer operate profitably and also by purchase of equipment and improvement of processes which combined to increase productivity and efficiency. At the same time an intensive exploration program re sulted in discovery of a number of important ore bodies west of the old Lead Belt. The development of these new mineral areas is described in more detail on the pages immediately following. St. Joe enters its new century on a firm foundation, promising well for the future. It has ranged far from its small beginnings, while remaining solidly rooted in the mining country where its life began a hundred years ago. The Company acquired the Edwards and Balmat prop erties in upstate New York in 1926. Soon afterwards St. Joe built a zinc smelter on the banks of the Ohio River, near Pittsburgh, to process the concentrates from these mines. The smelter went into operation in 1931, and ever since then, zinc has been making an important con tribution to the Company's sales and earnings. During the Twenties and Thirties St. Joe was active in investigating promising mining properties not only in the United States but abroad. One of the results of this effort was the development of a rich lead-zinc-silver ore body in Jujuy Province in northern Argentina, which is now mined by one of the Company's subsidiaries. Construction of concentrating mill and power plant for the Aguilar mine in Argentina began in 1935. 8 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. I St. Joe Today St. Joe enters its second century with the eleven principal operating properties described on the following pages. Three are lead mines and mills in Missouri and a fourth is also a lead mine and mill now in process of development there. The remaining properties include two zinc mines and mills in New York State, an iron mine in Missouri jointly owned with the Bethlehem Steel Corporation, a lead smelter in Missouri, a zinc smelter in Pennsylvania, and two leadzinc-silver mines in Argentina and Peru. In April, 1963, when production was resumed following an eight-month strike, the St. Joe mines in the old Lead Belt were reorganized into a new administrative unit known as the Federal Division. This is composed of eight mine units and a concentrating mill with supporting shops, yard, and service organizations located at Flat River, Missouri. The mill recently was modernized to an all-flotation unit with a capacity of 12,000 tons of ore per day. This vast complex, covering an area of more than forty square miles, is connected by an underground rail network consisting of more than 250 miles of mainline track. The ore trains usually consist of ten 12.5-ton cars pulled by electric locomotives. Maintenance for the Federal Division has been cen tralized in a single underground shop measuring approxi mately 800 by 1,500 feet. The shop has facilities not only Federal Division's concentrating mill at Flat River, Missouri. Ore hoisting shaft is in left foreground. for making major repairs to the rail and mining machin ery but has actually fabricated pieces of equipment as large as a rotary dump weighing more than twenty-six tons. In addition to its output of lead concentrate, the Federal mill produces copper concentrate. About half of the tailings or "chat" from the milling operations is sold as agricultural limestone. The Federal Division operates under the jurisdic tion of St. Joe's Southeastern Missouri Division, with headquarters at Bonne Terre. FEDERAL DIVISION STATISTICS Ore Hoisting Shafts 1 Shafts for Men and Materials 6 Mill Capacity (tons of ore per day) 12,000 Number of Employees 913 Tonnage of Ore Milled Since 1923 110,000,000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Indian Creek was the first of the major new lead mines in southeastern Missouri to be developed by St. Joe as a result of prospecting outside the old Lead Belt. This modern plant is located about thirty-five miles northwest of Bonne Terre. The ore body is in comparatively flatlying beds of dolomite enriched with lead sulfide. Under ground ore is hauled with ten-ton, diesel-powered dump trucks, with the maximum run now about one mile. From 1954 through 1963, Indian Creek has produced more than 4,500,000 tons of ore. In August, 1963, a new type of rock drill, called a rotary-percussion drill, was put into operation at Indian Creek. Two of these drills, which combine a rotary cut ting action powered by a hydraulic motor with the chip ping action of a percussioM-iype drill, are mounted on chassis and can be operated simultaneously by a single man at the control panel. Penetration rate is about four times greater than that of the conventional jack leg drill. "Giraffe" provides a firm, flexible platform for min ers who work slopes at Indian Creek and other mines. INDIAN CREEK STATISTICS Production Began Number of Mine Shafts Mill Capacity (tons of ore per day) Number of Employees Construction and Development Costs 1953 2 2,500 108 $6,800,000 The Indian Creek mine, in Washington County, has been producing lead concentrates for St. Joe since December, 1953. The Viburnum plant is regarded as one of the most modern and efficient lead mining and milling installations in the world. Since it began operating in I960, it has pro duced more than 2,400,000 tons of ore. During 1963 a third production shaft, No. 29, was; bottomed, and skip loading equipment and shaft steel were installed. This unit, which will cost about $2,600,000, is scheduled to start operating in late 1964, and will in crease Viburnum's production to over 7,000 tons of ore per day. The capacity of the mill was also increased to 7,000 tons per day through the installation of fine grind ing and flotation equipment for the second milt circuit. In addition, two more silo-type fine-ore bins were built, increasing the plant's storage capacity to 13,200 tons. A . 2,500-foot airstrip is being built a half mile north of the Viburnum mill site. VIBURNUM STATISTICS Production Began Ore Hoisting Shafts Mill Capacity (tons of ore per day) Number of Employees Construction and Development Costs 1960 3 7,000 254 $24,000,000 No. 29 shaft at Viburnum, to be activated this year, cost about $2,600,000. It will in crease production by about 2,000 tons daily. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Construction of the new Fletcher plant, located irt Reynolds County, Missouri, about forty miles southwest of Bonne Terre and fifteen miles south of Viburnum, be gan June 27, 1963. Since then clearing and grading of the site have been completed. The collar for one of the shafts has been poured; ore-bin foundations, a retaining wall for the mill, the compressor cooling pond, storm sewers, and water lines have also been finished. Work is well under way on the service building, which will contain offices, change room, hoist and compressor rooms, store room and shop. The Fletcher mine was patterned on the Viburnum installation, and was designed by St. Joe engineers. There will be two shafts, about 300 feet apart. The mine will be trackless, using large drill jumbos and rubber-tired load ing and hauling equipment. Primary crushing will be done underground: skip loading and hoisting will be fully auto mated, as will be the mill on the surface. Concentrates will be trucked to the railroad, forty-five miles away, and shipped from there to the smelter at Herculaneum. Fletcher plant site as It appeared in November, 1963, five months after the start of development work. Depth sf Shaft 1010 feet Ah 'Vn * Dapth of Shaft 1301 feet'J 0 No. 31 Shaft Headframe 0 No. 30 Shaft Headframe 0 Ore Bin 0 Mill 0 Concentrate Loading and Storage 0 Shaft No. 31 (Men and Materials) Cross section shows principal instal- /// Ore lations planned at Fletcher mine. ''' ' Honron FLETCHER MINE STATISTICS First Production Expected Anticipated Mill Capacity (tons of ore per day) Anticipated Number of Employees Estimated Construction and Development Costs 1966 5,000 160 $11,500,000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. The smelter at Herculaneum has been processing lead concentrates from St. Joe's properties in southeastern Missouri since 1891. During its history there have been a number of major modernization and expansion pro grams at Herculaneum. The most recent of these, de signed to increase the capacity of the smeltef from the present 110,000 to more than 200,000 tons of refined lead per year, is currently in progress. These improve ments, which will be completed late in 1966 at a cost of approximately $10,000,000, will make it possible for the smelter to handle the increased tonnage of concentrates anticipated about that time from the new Fletcher mine and other St. Joe properties. The Herculaneum expansion program will involve a modern up-draft sintering system in place of the pres ent down-draft, the probable production of an appreci able tonnage of sulfuric acid, larger blast furnaces, and expanded refinery and materials handling facilities. Im provements made at Herculaneum during 1963 included a more economical system for handling slag and building a covered area for storing refined lead. HERCULANEUM STATISTICS Production Began 1 Number of Furnaces Present Annual Capacity (tons of pig lead) Number of Employees 1891 3 110,000 404 Molten lead from the furnace is poured into treatment kettles for removal of impurities prior to being cast. > '.i . . IP Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Since 1930, when it began production, the Balmat property has produced over 12,000,000 tons of crude ore for St. Joe. Current development work at Edwards plant is expected to expand production of crude ore and zinc concentrates by 50%. St. Joe entered zinc mining in 1926 through the purchase from the Northern Ore Company of the Edwards and Balmat properties in upstate New York. At that time the Edwards mine was in operation; Balmat, ten miles to the south, was brought into production four years later. By the end of 1963 the Edwards mine had produced for the Company 4,388,000 tons of crude ore, while Balmat's output had been 12,135,000 tons. The Company is currently expanding the produc tion of the Edwards mine from 410 to 600 tons of ore per day, with a target date of July 1, 1965, at an esti mated cost of $700,000. The present countershaft is be ing deepened by 600 feet and a new hoist will be installed. A new flotation circuit to take care of this increased production has been installed in the Edwards concentrating mill. Early in 1963 the efficiency of the Balmat mill was increased by the addition of a zinc concentrate thickener. Both the Edwards and the Balmat plants operated on a five-day week throughout 1963. BALMAT-EDWARDS STATISTICS St. Joe Production Began Number of Mine Shafts Mill Capacity (tons of ore per day) Number of Employees BALMAT 1930 2 2,100 277 EDWARDS 1926 2 410 84 At Balmat-Edwards diamond drill is used underground to pinpoint location of zinc-bearing ore bodies at distances up to 1,000 feet. Hsscsnr* 14 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ) ! I i The smelter at Josephtown was built by St. Joe to i produce zinc oxide and later zinc metal from the concen f trates supplied by the Balmat and Edwards properties. In 1931, when it went into operation, this smelter already represented a significant technological advance. Since then, through several major plant expansions, plus con i tinuing improvements in processes, equipment, and tech niques, Josephtown has become one of the largest and most efficient smelters in the world, with sixteen furnaces (twelve for zinc metal and four for zinc oxide) in opera f tion. As an example of this increase in productivity, the original Josephtown zinc metal furnace had a design capacity of thirty tons per day. On several occasions during 1963, individual zinc metal furnaces produced t considerably in excess of ninety tons per day. In 1963, Josephtown set several records for zinc metal production. f Refinery capacity for producing special high-grade zinc t (99.99% zinc) is being increased from 2,200 to 3,700 JOSEPHTOWN STATISTICS tons per month. In addition to zinc and zinc oxide, the Production Began 1931 i smelter produces substantial quantities of cadmium and Number of Furnaces 16 I sulfuric acid as by-products. Present Annual Capacity (tons of zinc equivalent) 175,000 Josephtown site on Ohio River was selected for its Number of Employees 1,164 proximity to major markets for smelter's products. Meramec plant began producing and shipping iron pellets early in 1964. Diagram, right, identifies principal surface installations. The Meramec Mining Company, owned jointly (50% each) by Bethlehem Steel Corporation and St. Joseph Lead Company, has developed and will oper ate the Pea Ridge iron ore property, located in Wash ington County, Missouri, about forty miles northwest of Bonne Terre. The first indication of the presence of iron ore in this area came shortly after the close of World War II, as the result of aerial surveys conducted by St, Joe, the U. S. Geological Survey, and the Missouri Geological Survey. Evidence obtained through a magnetometer sur vey was sufficient to send St. Joe exploration crews into the vicinity; the first discovery hole at Pea Ridge was drilled in the autumn of 1953. Subsequent drilling over the next four years disclosed the presence of a high-grade ore body measuring some 300 feet in width by 2,200 feet in length and of an as yet unknown depth. St. Joe and Bethlehem Steel then agreed to share equally in the costs of developing the property to produce iron pellets of premium grade for use in blast furnaces, each party to own half of the production. Construction and develop ment costs are estimated at approximately $52,000,000. This development work was virtually completed by the end of 1963. Underground, five levels were developed simultaneously from 30% completion at the beginning of the year to the point of actual slope production. The main ore hoist was put into operation and loading facili ties were substantially completed. These underground operations produced a total of 163,000 tons of crude ore, which was passed through the crushing plant and stock piled^on the surface. ' The crushing and milling units of the plant were completed in April, 1963, and one of the five pelletizing furnaces was put into operation early in 1964. Railroad yard apd loading facilities, as well as the electrical power supply installations, were completed during the year, and Meramec is designed to produce Iron pellets like these at the rate of 2,000,000 long tons per year. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. A No. 2 Shaft B No. 1 Shaft f C Secondary Crusher D Mill E Main Office, Change Room, and Hoist fof No. 1 F Shop, Boiler Room, Warehouse G Hydro-Separator H Fuel Oil Storage I Pellet Plant J Loading Tracks construction was started on a pump station on the banks of the Meramec River. Initial production from the property began early in 1964. When the Meramec plant achieves full production, its capacity is expected to be 12,000 long tons of ore per day, with a potential of 2,000,000 long tons of finished pellets per year. Plans are now under way for installing a flotation section in the mill to recover pyrite, apatite, and hematite (iron) in the form of concentrates. Present schedules call for the pelletizing plant to operate continuously, and for the mill to run six days per week. The mine, thanks to facilities for stockpiling ore, will operate on a five-day basis. Total personnel will num ber about 800, of whom about 750 will work under ground. The finished pellets will be shipped from the plant on a spur built by the Missouri-Pacific Railroad to its main line twenty-five miles away, at the rate of about 100 ore cars per day. The underground and surface installations at Mera mec, with their advanced, clean design and their highly automated equipment, combine to produce one of the most modern mining properties in the world. MERAMEC STATISTICS Production Began February, 1964 Number of Shafts 2 Design Capacity (long tons of ore per day) 12,000 Rated Annual Capacity (long tons of iron pellets) 2,000,000 Anticipated Number of Employees 800 Huge Koepe hoists in headframe of No. 2 shaft brmg ore from the mine at 2,600 feet per minute. These rod and ball mills typify the highly automated, up-to-date equipment found at Meramec. 17 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Other St. Joe Operations In 1925 St. Joe investigated an outcrop of lead ore that had been discovered about 2,000 feet below the summit of a 17,000-foot mountain in northern Argentina, not far from the Bolivian border. After extensive exploration, which revealed the presence of a rich lead-zinc-silver ore body, the Company exercised its option on the property. In 1929 an Argentine corporation, Cia. Minera Aguilar, S. A., (99.9% owned) was organized, but active develop ment had to be postponed during the Depression of the 1930's. Thereafter, it was decided to place the mine in production on the basis of 250 tons of ore per day. Since 1936, the capacity of the Aguilar mill has been increased from the original 250 tons per day to 800 and finally to 1,100 tons per day, and the mine has become not only the most important mining operation in Argen tina, but one of the world's outstanding lead-zinc-silver mines as well. Because of its remote location, every con ceivable community service has had to be supplied by the Company. Approximately 5,000 people live in the Aguilar mill camp, shown above, and the mine camp 1,500 feet higher on the mountain near the mine. Every community service is provided and paid for by the Company. Aguilar has its own power plant, water and sewer systems, stores. Electric locomotive, driven by Argentine miner, pulls ore train through a tunnel in the Aguilar mine. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. churches, and recreational facilities, and it has provided these services so competently that the community is con sidered one of the most remarkable and comfortable min ing camps in South America. Argentina's lead-zinc-silver requirements are supplied by Aguilar. In recent years, a surplus of zinc concentrates has been exported to Europe and to Japan, but the bulk of Aguilar's production is sold and used in Argentina. Largely through maintenance of continuity of skilled management, Aguilar has been able to cope remarkably' well with steadily rising operating costs. During 1963, for example, the cost of supplies increased by about 50%, and wage rates by almost 24%, handicaps that were in part offset by ingenious measures that included a method of curtailing timber consumption and the adoption of ammonium nitrate-fuel oil explosives. In 1963, Aguilar produced 28,159 metric tons of lead concentrates and 49,581 metric tons of zinc concentrates, in comparison with 30,041 and 50,807 respectively in 1962. Aguilar has also contributed substantially to the devel opment of Argentina's industry, as well as to its economic health. The Company has invested in a wide range of Argentine industry, although its outstanding investments are a sulfuric acid and electrolytic zinc plant near Rosario, and a zinc smelter at Comodoro Rivadavia, both of which plants are outstanding from a technical viewpoint. The Aguilar management and its employees share firm con fidence in the future growth and prosperity of Argentina. It is a country of practically unlimited possibilities, and Aguilar has every hope of sharing in that development. By a decision taken in 1956, St. Joseph l ead Company acquired a majority interest and subsequently a complete ownership in Cia. Minerales Santander, Inc., which was organized to own and to operate a lead-zinc-silver ore body in the Peruvian Andes. To date, this ore body, which lies at an elevation of 14,500 feet, has been worked only by open pit methods, although surface diamond drilling indicates that the ore body continues at depth. Santander's 750 ton per day mill produces a copper-lead-silver con centrate that is sold in Peru and in Germany, and a zinc concentrate, all of which is exported. During 1963, the Santander operation was on a little better than a break even basis owing to the abnormally high costs of remov ing large tonnages of overburden to enable mining the ore in the open pit. In addition, considerable expense was required to carry forward underground exploration work to delineate the ore body at depth. In 1963, Santander produced 8,716 short dry tons of lead concentrate and 33,954 short dry tons of zinc concentrate, compared with 8,823 and 29,356 respectively in 1962. Santander, showing open pit mine in background, is situated in the Peruvian Andes at an altitude of 14,500 feet. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. St. Joe's Tools 1M* For forty years the St, Joe shovel has served the Company as a rugged, highly efficient tool for loading ore. Throughout the long history of the St. Joseph Lead Company, a very high priority has been assigned to. the search for new and better ways to mine and efficiently process lead and zinc ore. The result of this energetic and continuing effort has been a large number of important technological ad vances--many more than can be described on these two pages. There is room, however, to note six outstanding developments--the St. Joe shovel, the diamond drill, the three-drill jumbo, roof bolting, the use of ammonium nitrate and fuel oil as a blasting agent, and the electro- thermic furnace--which typify the improvements in equip ment, processes, and techniques which have made substantial contributions to St. Joe's progress. As mentioned previously, the diamond drill stands first. It is, after all, the tool that indicates the existence of ore, not only by outlining the deposit but by showing the precise location of the individual ore bodies. At the begin ning it opened the eyes of St. Joe Trustees to the potential of the Lead Belt, and it continues to point the way to new opportunities. * Next in importance, perhaps, is the St. Joe electric shovel, a most rugged, durable, useful piece of loading equipment. The St, Joe shovel is not an adaptation from previously existing tools. It was designed by the Com pany's engineers to meet the special requirements of the Lead Belt. It was built by the Thew Shovel Company to St Joe's specifications and was first put into operation in 1922. Since then it has been repeatedly modified and im proved. There are now fifty-two modified St. Joe shovels currently in use in the Company's operations in Missouri. What this shovel has meant to St. Joe can be summed up as follows: When it was first put into operation, it cut shoveling costs to 16.6 cents a ton, then about two cents less than hand-shoveling costs; today, when handshoveling costs have risen by 400% to 500%, it shovels a ton of ore for less than two cents more a ton than when it was first built. Before the shovel can do its work in the mine, the drilling and blasting operations must be performed. One of the most efficient of the drilling tools used by St, Joe is the three-drill jumbo. This squat, powerful machine -- This jumbo drills three holes simultaneously into the rock face, it is operated by a single miner. St. Joe was a pioneer in using ammonium nitrate and fuel oil as a blasting agent in small-diameter holes. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COKE BRIQUETS SINTER This self-propelled machine. Si. Joe's newest pros pecting tool, drills into rock at up to 160 feet per day. operated by one man lumbers into position, trains its three whirling drills on the rock face, and bores in to the desired depth in a fraction ot the time it used to take to do the job by hand. Until very recently dynamite was used to break up ore so that it could be loaded, dumped into trucks or cars, and hauled away to the mill. But dynamite is a highly ex pensive item. To cut this cost, the Company began a research program in 1960 to determine whether the lowcost ammonium nitrate-fuel oil explosive (AN/FO) then being used in a few open pit mining operations elsewhere could be adapted to St. Joe's underground lead and zinc mines. As a result, AN/FO has largely supplanted dyna mite as a blasting agent throughout St. Joe's propertied here and abroad. During its history the Company has developed a considerable number of methods and techniques which have been adopted throughout the mining industry. Per haps the most valuable of these contributions is a method St. Joe's use of anchored bolts to support unstable mine roofs has been widely adopted elsewhere. Cross section of one of electrothermic zinc metal furnaces at Josephtown. Productivity of furnaces has been improved continuously over past 30 years. for supporting the roof (called the back by Missouri miners) of stopes or drifts with steel expansion bolts anchored in the roof itself. The wide acceptance of this technique has revolutionized coal mining, making it possible to mine ore that would otherwise be inacces sible. In the high stopes of the Lead Belt, roof bolting is done from trapezes, hung at considerable effort and ex pense from the backs of the stopes. Giraffes (see page 10) are currently used for root bolting in stopes of medium height, thereby saving much time and cost. Finally, at the end of the long line of complex and costly equipment required to blast, transport and process ore from the rock face until it is ready for market, there stands the smelter. Here again the Company has made im portant technological contributions, notably in the design and construction of the electrothermic furnace and its companion the metal condenser used at Josephtown. These furnaces have proved to be an outstanding example of constantly increasing productivity, through continu ing technical progress. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. During its first century St. Joseph Lead Company sold to its customers almost 7,000,000 tons of lead ingots and pigs like these. St. Joe Tomorrow During its first hundred years, St. Joseph Lead Company has supplied to domestic industry almost 7,000,000 tons of refined lead and since 1931, dose to 2,000,000 tons of zinc metal. Both metals have contributed materially to the expansion of the American economy, particularly in the all-important fields of construction, transportation and communications. Realizing the magnitude of this contribution to in dustry, what can you expect from your Company in the future? What growth can be expected in the uses of lead and zinc? What new products will be developed? What can research do to widen your Company's opportunities? This section of the Report will attempt to answer some of these questions to give you an idea of the future of St. Joseph Lead Company. First there is the natural growth to be expected simply because of increasing demands resulting from the population increase. On a long term basis, domestic con sumption of lead has risen recently about 3% per year and zinc about 4% to 5% per year. We believe this trend will continue and perhaps increase. Rising standards of living throughout the world also make increasing demands for metal inevitable. The rate of growth abroad is potentially much higher than in the United States as the people of other nations learn to ex pect and to use the same household appliances that we have become accustomed to. In the United States our an nual per capita consumption is now about 12.5 pounds of lead and 11.7 pounds of zinc, whereas in Italy, how undergoing rapid expansion industrially, consumption is only 2.6 pounds of lead and 2.7 pounds of zinc per capita. Although it is difficult to gauge precisely the re sulting increase in demand for metals, we believe growth will take place to an extent that will amply utilize the available supply. The foregoing outlines the natural growth built into your Company's future. Let us examine what St Joe does in research and development to enhance that future. Research and Development St. Joe is engaged in a continuing and accelerated program of applied research and development aimed at the creation of new products for new and existing mar kets. Traditionally, research efforts have concentrated on lead and zinc metallurgy. More recently, however, the scope of projects under investigation has broadened to in clude other metals and other technical fields, principally chemical. The Company's research is implemented by three separate, though not necessarily mutually exclusive programs. First, a substantial number of projects are conducted at Company laboratories. In addition, either under its sole sponsorship or in partnership with other companies having specialized skills, it uses outside scien tific facilities on a contract basis. Finally, St. Joe is a lead ing participant in the International Lead Zinc Research Organization, which currently is administering more than 50 projects directed toward maintenance and expansion of markets for the two metals. Among current product developments that show much promise are the utilization of lead for sound atten uation and vibration control, perfection of wrought zinc products such as extrusions for door and window frames and automotive trim, and creation of new zinc oxide pig ments to improve standard and specialty grades of paper. All these new product activites are closely coordi nated with the Company's customer service program, which both assists the consumer in his employment of lead and zinc to his immediate advantage and provides an important means of keeping abreast of future opportu nities in new markets. 22 . ' . ' Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. St. Joe's production capacity for Special High Grade zinc is being increased from 2,200 to 3,700 tons per month. Exploration St. Joe could not take advantage of expanding mar kets for its products without adequate supplies of raw materials. A vigorous program of exploration is, there fore, essential to the Company's continued existence. It must find ore reserves that are adequate and can be profit ably exploited. St. Joe's most successful recent explora tion program was the one begun in 1947 in Missouri which resulted in the discovery and development of the Indian Creek, Viburnum and Fletcher mines and the Pea Ridge iron ore body. Similar programs are going forward both in the United States and abroad. The Company is not restrict ing itself to lead and zinc. It is constantly looking for any mineral raw material that can contribute to its activities as a producer and supplier of industrial raw materials. Reserves and Capacity The Company's present ore reserve position in re spect to lead, zinc and iron is excellent. With new facil ities coming into production during the next few years, any decrease in production from the older and higher cost mines can be more than made up. When these new prop erties have been brought into production, St. Joe will have a capacity in excess of 200,000 tons per year of pig lead, and in excess of 175,000 tons of zinc equivalent, of which 45,000 tons will be Special High Grade metal. Operating at capacity, the Pea Ridge mine should produce for St. Joe 1,000,000 tons per year of iron pellets. These capacities will make St. Joe the largest domestic miner of lead, one of the largest producers of zinc, and a substan tial producer of iron pellets. St. Joe's Products At present St. Joe's lead and zinc products enjoy an excellent reputation for quality throughout American in dustry. This reputation will be maintained. The Company offers lead in several sizes and grades, as well as in combination with alloys such as antimony and tin, to suit the changing requirements of the individ ual customer. The principal brands include St. Joe Chem ical Lead, Doe Run Super Refined Lead, both in 100 lb. pigs and 1 ton ingots, as well as St. Joe Caulking Lead in 25 lb. notched bars. Zinc is sold as Special High Grade, High Grade, Intermediate, Brass Special, Prime Western, and Con tinuous-line Galvanizing Alloys. The Company offers ail grades of American and French Process zinc oxide. In addition, as by-products of its lead-zinc opera tions, St. Joe sells cadmium, sulfuric acid, copper con centrates, silver, and agricultural limestone. Under its agreement with Bethlehem Steel Corpora tion, the Company owns one half of the pellets produced from the Pea Ridge mine. These pellets constitute an ad ditional St. Joe product for sale to the steel industry. To Summarize As St. Joe enters its second century, it is well aware that it cannot rest on the accomplishments of the past. Just as at one time St. Joe's future was assured by the bold step of consolidation of the old Lead Belt properties, so now its future has been enhanced by the developments described in this Report. The preceding paragraphs have indicated at least some of the areas where opportunities are known to exist. Some of these opportunities pre sent themselves simply in the increased demand for St. Joe's products inherent in the growth of industry, both foreign and domestic. Other opportunities will be devel oped by research and energetic market development. St. Joe has large reserves of lead, zinc and iron. It has mines and plants that, from the standpoint of efficiency and pro ductivity, will stand comparison with any domestic com petitor. St. Joe has enthusiastic and competent personnel on its staffs and has programs by which these staffs can increase the Company's productive capacity and its mar ket opportunities. St. Joe has no intention of standing still. It is going ahead with the same spirit and with the same prospects for success that have marked its first one hundred years of progress. 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 OFFICE 250 Park Avenue, New York 17, N. Y. BOARD OF TRUSTEES YEAR ELECTED Andrew Fletcher*................ . . . .................................................... ..................................................... Chairman George I. Brigden*................ ..... Retired Vice President and Treasurer, St. Joseph Lead Company Francis Cameron*................. ....................................................... ............... .......................................... President Bernard F. Desloge ....... . , . ......................... Vice President, Minerva Oil Co., St. Louis, Missouri Eli Whitney Debevoise*.. ,. ..................... .. . .Debevoise, Plimpton, Lyons & Gates, 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 Charles R. Ince..................... ........................................................................................ Vice President -- Sales Joseph Pursglove, Jr................. .......................... Vice President, Consolidation Coal Co., Pittsburgh, Pa. Plato Malozemoff ......... .. ................................................President, Newmont Mining Corporation Guido E Verbeck, Jr............. Senior Vice President, Morgan Guaranty Trust Company of New York Elmer A. Jones..................... , ,........................................ . Division Manager, St. Joseph Lead Company Lawrason Riggs III* ............ ............................... .. .....................................................................Vice President *Member of Executive Committee EXECUTIVE OFFICERS 1921 1944 1953 1953 1954 1954 1957 1958 1959 1961 1961 1963 1963 Andrew Fletcher, Chairman Francis Cameron, President Charles R. Ince, Vice President -- Sales Robert H, Ramsey, Vice President Lawrason Riggs III, Vice President John R. Englehorn, Assistant to the President James G. Colvin, Treasurer Donold K. Lourie, Secretary William L. Murphy, Jr., Comptroller William J. Elliott, Assistant Secretary Edward P. Merrell, Assistant Treasurer MANAGER OF EXPLORATIONS Norman H. Donald, Jr. UNITED STATES DIVISION MANAGERS Mines Elmer A. Jones, Southeast Missouri Marshall G. Jones, Balmat-Edwards, N. Y. Smelters John W. Sherman, Herculaneum, Missouri Charles D. Henderson, Josephtown, Pennsylvania CIA. M1NERA AGUILAR, S. A., ARGENTINA Wing L. Lew, Managing Director CIA. MINERALES SANTANDER, INC., PERU Clinton L. Miller, General Manager MERAMEC MINING COMPANY Robert G. Peets, Resident Manager GENERAL COUNSEL Debevoise, Plimpton, Lyons & Gates 320 Park Avenue, New York 22, N. Y. TRANSFER OFFICE St. Joseph Lead Company 250 Park Avenue, New York 17, N. Y. AUDITORS Haskins & Sells Two Broadway, New York 4, N. Y. REGISTRAR First National City Trust Company 22 William Street, New York 5, N. Y. 24 , PRINTED IN U'S.A Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 100 YEARS OF PROGRESS St. Joseph Lead Company 250 PARK AVENUE, NEW YORK 17, N. Y. 1S63 FINANCIAL REVIEW CONTENTS St. Joseph Lead Company and Consolidated Subsidiaries Balance Sheet Statements of Income and Retained Earnings Notes to Financial Statements Accountants' Opinion Comparative Financial Review 1954-1963 Working Capital Analysis 1954-1963 General Statistics 1954-1963 Lead Statistics (U. S. and St. Joe) Zinc Statistics (U. S. and St. Joe) Compania Minera Aguilar, S. A. Balance Sheet Statements of Income and Retained Earnings Notes to Financial Statements Accountants' Opinion 2 4 5 7 8 10 10 12 13 14 16 17 18 SI. Joseph Lead Company and Consolidated Subsidiaries CONSOLIDATED ASSETS 1; 1963 1962 Current Assets: Cash.......................................... ........... Marketable securities................ .. Accounts receivable -- trade .................. Claims for Federal income tax refunds.. Other accounts receivable.................... Inventories (Note 1): Lead, zinc, etc................................... Materials and supplies...................... 1 .' $ 3,761,225 21,344,579 7,087,959 1,914,245 4,805,491 6,508,886 $ 45,422,385 $ 4,269,022 21,773,537 5,106,738 271,268 1,362,442 8,382,086 5,658,431 $ 46,823,524 Investments and Advances (Note 2)........ 24,839,162 19,811,855 Property, Plant and Equipment (Note 3) . Less accumulated depreciation and depletion.................................... 138,564,706 90,931,628 Other Assets: Securities on deposit with Governmental agencies.......................... ................. Cash and marketable securities -- Fire Insurance Fund (see contra) ... 964,193 333,626 Deferred Charges: Deferred shaft sinking, development and exploration charges (Note 4) ....... Other deferred charges............ . 3,790,379 628,710 47,633,078 134,782,968 87,685,447 1,297,819 964,575 329,550 4,419,089 2,018,370 851,913 47,097,521 1,294,125 2,870,283 Total $123,611,533 $117,897,308 See Notes tti Financial Statements. 2 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. BALANCE SHEET DECEMBER 31, 1963 AND 1962 LIABILITIES AND STOCKHOLDERS' EQUITY 1963 1962 Current Liabilities: Accounts payable and accrued liabilities. $ 6,009,811 Long-term debt due within one year (Note 5) ........................................... . 4,282,143 $ 4,289,074 3,865,474 Federal income taxes.............................. 1,060,174 $ 11,352,128 598,785 $ 8,753,333 Long-Term Debt (Note 5)........................ 17,095,240 21,802,383 Deferred Federal Income Taxes -- principally related to accelerated amortization and depreciation ..................................... 2,061,910 1,339,633 Reserves: .; Injury claims and workmen's liability insurance............................................. Employees life insurance and retirement Fire insurance (see contra).................... 682,782 289,887 333,626 1,306,295 737,417 356,101 329,550 1,423,068 Stockholders' Equity (Notes 5 and 6): Capital stock, par value $10 per share: Authorized--5,000,000 shares Outstanding--1963, 3,028,217 shares; 1962, 2,989,382.5 shares (after deducting shares in treasury; 1963, 21,386.35; 1962,21,416.35)......... 30,282,170 29,893,825 Other Capital -- representing principally excess of amount of stock dividends over par value of capital stock......... 22,732,538 22,044,183 Retained Earnings 38,781,252 91,795,960 32,640,883 84,578,891 Total $123,611,533 $1 17,897,308 Sec Notes to Financial Statements. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Si* Joseph Lead Company and Consolidated Subsidiaries STATEMENT OF CONSOLIDATED INCOME FOR THE YEARS ENDED DECEMBER 31, 1963 AND 1962 Net Sales ........................................................................................... Cost of Sales................................. ..................................................................... Other Income: Dividends on: Foreign investments...................................................... Domestic investments............................ .. Interest...................................................... ............ Royalty, Meramec Mining Company ........... Sundry --net.......................................................... .. Total.............................................................................. Deduct: Selling, general and administrative expenses............. .. . . Research expenses.......................... ............................... .. Strike and shutdown expense................. ......................... Shaft sinking and development expenses Meramec, Viburnum and Fletcher Projects (Note 4) Other exploration and development expenses................. Past service annuities (Note 8)....................................... Depreciation ...................................................................... Depletion........... ................................................................ Interest on indebtedness.................................................... Write-down of North Africa investment.......................... Total Deductions.................................................... .. . Income Before Income Taxes.................................................... U.S. and Foreign Income Taxes............................................... Net Income for the Year.......................................................... Special Credit (Note 7) .................................................... .. . Per Share on Shares Outstanding at End of the Year (Note 7).................. See Notes to Financial Statements, 1963 $75,598,525 57,932,666 17,665,859 2,371,238 241,950 853,089 1,250,000 275,344 22,657,480 2,172,139 392,996 1,566,461 1,500,652 157,195 153,580 3,758,074 139,907 975,111 347,129 11,163,244 11,494,236 1,590.463 9,903,773 __ $ 9,903,773 $3.27 1962 $67,981,883 58,106,248 9,875,635 3,360,152 227,875 716,672 729,166 235,381 15,144,881 2,138,869 261,595 1,844,107 2,656,177 114,574 153,580 3,402,232 136,616 1,142,997 -- 11,850,747 3,294,134 506,502 2,787,632 1.532,241 $ 4,319,873 $ 1.44 FOR THE YEARS ENDED DECEMBER 3 EARNINGS ' 1962 Net Income for the Year and Special Credit........................ Dividends Paid: Cash (1963, $1.25 per share; 1962, $1.00 per share) Stock (10%)................................... ............................. Total.......................................................................... See Notes to Financial Statements. 1963 $32,640,883 9,903,773 42,544,656 3,763,404 -- 3,763,404 $38,781,252 1962 $37,615,272 4,319,873 41,935,145 2,717,622 6,576,640 9,294.262 $32,640,883 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Si, Joseph Lead Company and Consolidated Subsidiaries NOTES TO FINANCIAL STATEMENTS I. INVENTORIES Inventories ot lead, zinc, etc. (finished, in process, and concentrates) are valued at cost (not in excess of market), determined substantially on last-in, first-out (LIFO) method. Materials and supplies arc valued at average cost. 2- INVESTMENTS AND ADVANCES : The carrying value of investments in the consol idated balance sheet, which are stated at cost, except as noted below, do not indicate the current value of such investments. The following is a summary ot in vestments and advances: Subsidiaries not Consolidated: Conipania Minera Aguilar, S. A. (nominal value) ........................... $ I Compania Mmorales Santander, Inc. (capital stock $899,071, deben tures $2,363,536, and advances $555,000) ..................................... 3,817,607 Fifty-Percent Owned Companies: Mcramec Mining Company (capital stock $2,500, and advances, net $15,007,624) ................................... 15,010,124 Mine La Motte Corporation (capital stock-nominal value $1 and ad vances $150,000)..... 150,001 Other Securities, Loans, Etc.: The New Jersey Zinc Company -- 100,000 shares capital stock (at cost less non-taxablc dividends) 5,724,028 North Africa Investment: Societe des Mines de Zellidja (at market quotation, less than cost) ......................... 52,115 Societe Nord Africame du Plomb and Societe Nouvelles des Mines D'Ain-Arko (nominal values) 2 Sundry securities, loans, etc., less re serve of $200,000 ........................... 1 85,284 $24,839,162 The financial statements of Compania Minera Agui lar, S. A. arc included herein on pages 14 to 18, Divi dends received trom the subsidiary are recorded as they are converted into U.S. dollars. The net assets ot Compania Mincrales Santander, Inc. and its liability to the Company on debentures and advances totaled $4,175,642 at Deccm her 31, 1963 and its net loss for the year then ended was $44,664 after provision for interest on indebtedness to the Com pany, depreciation, and depletion ot $145,308, $308,290, and $66,886, respectively. The loss tor the year 1962 was $245,700 after provision tor interest on indebtedness to the Company, depreciation, and de pletion ol $124,973, $278,838, and $100,621, respec tively. Development costs tor 1963 were $439,945 of which $286,955 was charged against income and SI52,990 was deferred. Such costs for 1962 were $432,088 of which $222,791 was charged against in come and $209,297 was deferred. During the year 1963. Bethlehem Steel Corpora tion and the Company each incurred expenditures ol $9,512,296 for the account of Meramec Mining Com pany. Of this amount, $5.591,947 was recorded in the Company's accounts as an additional investment in that fifty-percent owned company, and of the balance of $3,920,349, representing shaft sinking and develop ment expenditures, $2,744,244 was capitalized under the policy adopted January 1, 1963 (see Note 4), and $1,176,105, together with $31,053 of items deferred in prior years, were charged against income. For financial accounting purposes, depreciation is provided in the accounts of the Company on its share of the depreciable property of Meramec Mining Company over twenty years, but for Federal income tax purposes on the sum-of-the-years-digits method over ten years. A half year's depreciation was provided in 1963 in the amounts of $398,231 and $1,409,294 for book and tux purposes, respectively, and deferred U.S. income taxes of $525,753, based on current tax rates applied to the dilTcrence in the depreciation amounts were charged against income. The Company's equity in the net assets of Mine La Motte Corporation at December 31,1963 was $343,498 and its equity in the corporation's net income (prin cipally from the sale of capital assets) for the year then ended was $61,505. 3- PROPERTY, PLANT AND EQUIPMENT All properties arc stated at cost except tor $17,000,000 ot mining properties and mineral rights stated at appraised values, lor which full allowances for depletion have been provided. The net amount ot property, plant and equipment as shown in the consolidated balance sheet does not in dicate the present value of these assets, 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. SHAFT SINKING, DEVELOPMENT AND EXPLORATION EXPENDITURES Prior to December 31, 1962, the Company fol lowed the practice ot charging shaft sinking and de velopment expenditures on new ventures against income. Effective January 1, 1963, the Company adopted the practice ot capitalizing tor financial accounting purposes, such expenditures, reduced by amounts equal to the current tax reductions. The amounts so capital ized are to he written off over the life ot the property or the lives of the related mine equipment. The change increased net income tor 1963 by $3.118,239 of which $2,744,244 represented the capitalized expenditures ot the Meramec project and $373,995 related to the Vi burnum and Fletcher projects. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. St. Joseph Lead Company and Consolidated Subsidiaries NOTES TO FINANCIAL STATEMENTS (continued) 5. LONG-TERM DEBT Long-term debt, exclusive of amounts due within one year, at December 31, 1963 and 1962 was as follows: 1963 1962 3 Vh % Notes payable to Consolidation Coal Company................ $ 4,250,000 4% and 414 % Notes payable to banks. .. 11,428,571 ! $ 5,100,000 14,285,714 414 % Notes payable to Bethlehem Steel Corporation............ 1,416,669 2,416,669 $17,095,240 $21,802,383 The 3Va % Notes are payable in fixed semi-annual instalments of $425,000 each on January l and July 1 through July 1, 1969. The instalments due January 1, 1964 and 1963 were paid on December 31, 1963 and 1962, respectively. The 4% and 414 % Notes payable to banks are payable in fixed semi-annual instalments aggregating $1,428,571 each on January and July 15 through July 15, 1968. The related Credit Agreement requires the maintenance of not less than $20,000,000 in working capital and prohibits the declaration of cash dividends which, taken with aggregate dividends paid since De cember 31, 1957, would exceed the sum of 75% of net earnings since that date, plus $6,000,000. At December 31, 1963, working capital amounted to $37,927,400, after excluding from current liabilities instalments of indebtedness under the Credit Agreement due within one year, and $12,766,180 of accumulated earnings were free from the prohibition against dividends. Under its Credit Agreement with Bethlehem Steel Corporation, the Company has assigned royalties to be received from Mcramcc Mining Company up to $ 1,000,000 annually as collateral security for the 414 % Notes payable. Since a royalty of $1,250,000 was due from Meramec Mining Company for the year ended December 31, 1963, $ 1,000,000 thereof received in January, 1964, was assigned as a payment against the Notes, which latter amount is included in long-term debt due within one year. 6. STOCK OPTION INCENTIVE PLAN Under the Stock Option Incentive Plan approved by the stockholders in 1958, 130,000 shares of the Company's unissued stock were reserved for issuance and sale to officers and other key employees under 60 years of age, at a price not less than the market price at the time the options are granted. Due to the 10% stock dividend declared in 1962, the total amount of shares so reserved was increased to 142,860 after the elimination of the stock dividend applicable to options exercised totaling 1,400 shares. The options may be exercised in equal annual in stalments on the anniversary date of each grant and any part of an option not exercised at the end of five years from the date of the grant becomes void and available for future grants. During the year 1963, no options were granted, but options for 38,835 shares were exercised, and options for 2,250 shares under the September 24, 1958 grant expired or were cancelled. The excess of the aggregate option price over the par value of 38,835 shares issued upon exercise of options in 1963, which amounted to $688,350, was credited to Other Capital. Outstanding options at December 31, 1963 ad justed to reflect the 10% stock dividend, both in the number of shares and the option prices, are as follows: Date of Grant Number of Shares Option Price September 22, 1959 April 28, 1961 Total 7,030 11,560 18,590 $27.73 27.39 At December 31, 1963 there remained available for future grants, 84,035 shares. On January 10, 1964, the Salary and Stock Option Committee granted options to purchase 35,300 shares of Capital Stock of St. Joseph Lead Company at $53,375 per share which was the closing price on the New York Stock Exchange as of that date. After this grant, there remain available tor future grants, 48,735 shares. 7. INCOME--1962 Certain amounts shown for 1962 reflect reclassi fications to conform with the classifications used in 1963. The Special Credit of $1,532,241 in 1962 repre sented the capitalization of items previously expensed, tax adjustments, etc., as a result of settlement of the Company's Federal income tax returns for the years 1949 through 1959. and was equivalent to $0.51 per share on shares outstanding at the end of 1962. 8. RETIREMENT AND PENSION PLANS The Company and its consolidated subsidiaries have a Retirement Pian for Salaried Employees and a Pen sion Plan for Payroll Employees, covered either by a contract with an insurance company or by funds de posited with a Trustee. The assets of the Plans are not included in the accompanying consolidated balance sheet. Both plans are non-contributory and all past service costs have been funded. The deferred past serv ice cost of $307,161 at December 31. 1963 is being amortized over a period ending December 31. 1965. Current service costs of both the Retirement Plan and Pension Plan aggregated $814,733 and $939,017 in 1963 and 1962. respectively. 6 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ACCOUNTANTS* OPINION HASKINS & SELLS CERTIFIED PUBLIC ACCOUNTANTS TWO BROADWAY NEW YORK 4 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 De cember 31, 1963 and the related statements of consolidated in come and consolidated retained earnings for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the ac counting records and such other auditing procedures as we con sidered necessary in the circumstances. In our opinion, the accompanying consolidated balance sheet and statements of consolidated income and consolidated retained earnings present fairly the financial position of St. Joseph Lead Company and its consolidated subsidiaries at December 31, 1963 and the results of their operations for the year then ended, in con formity with generally accepted accounting principles applied (ex cept for the change with respect to shaft sinking and development expenditures explained in Note 4 to Financial Statements) on a basis consistent with that of the preceding year. HASKINS & SELLS February 26, 1964 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. St* Joseph Lead Company and Consolidated Subsidiaries COMPARATIVE FINANCIAL Average Metal Prices (Cents per pound) Lead, New York................................... Zinc, St. Louis....................................... Sales ........................................................... Cost of Sales............. ................................ Gross profit on sales.............................. Other Income: Dividends ............................................. Interest and other (net) ...................... Royalty -- Meramec Mining Company Total ............... ......................... ................ Deduct: Selling, general administrative, research, etc........................................ Strike and shutdown expense............... Shaft sinking, development and exploration ....................................... Depreciation and depletion.................. Interest on indebtedness........................ U.S. and foreign income taxes............. Total Deductions.............................. 1963 11.137 11.997 $ 75,598,525 57,932,666 17,665,859 2,613,188 781,304 1,250,000 22,310,351 2,718,715 1,566,461 1,657,847 3,897,981 975,111 1,590,463 12,406,578 Net Income Before Special Credit........... Special Credit................... ....................... Net Income....................................... Per Share Outstanding at End of Year* .. Percent Gross Profits on Sales Applicable to: Lead .................................................. Zinc.................................................... 9,903,773 _ $ 9,903,773 $3.27 29 71 Total Assets......................................... .. Current Assets........................................... Current Liabilities ..................................... Current Ratio (to 1)........... ..................... Stockholders' Equity: Amount.................................................. Per share outstanding at end of year*.. $123,611,533 45,422,385 11,352,128 4.00 $ 91,795,960 $30.31 *Adjusted to reflect 10% stock dividend paid December 21, 1962, 1962 9.631 11.625 $ 67,981,883 58,106,248 9,875,635 3,588,027 952,053 729,166 15,144,881 2,554,044 1,844,107 2,770,751 3,538,848 1,142,997 506,502 12,357,249 2,787,632 1,532,241 $ 4,319,873 $1.44 6 94 $117,897,308 46,823,524 8,753,333 5.35 $ 84,578,891 $28.29 1961 10.871 11.542 $ 71,008,301 58,063,668 12,944,633 1,634,422 2,493,264 __ 17,072,319 2,272,135 -- 2,304,202 3,180,607 1,136,735 1,846,444 10,740,123 6,332,196 -- $ 6,332,196 $2.12 26 74 $120,298,163 54,787,270 11,276,912 4.86 $ 82,967,539 $27.76 I960 11.948 12.946 $ 79,970,908 69,062,502 10,908,406 1,991,830 551,587 _ 13,451,823 2,333,034 -- 2,880,829 3,766,920 1,172,042 326,930 10,479,755 2,972,068 _ S 2,972,068 $.99 26 74 $116,545,876 45,178,`l67 7,485,650 6.04 $ 79,349,540 $26.55 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. REVIEW 1954-1963 1959 12.211 11.448 $ 86,611,677 72,804,292 33,807,385 2,276,864 732,196 16,816,445 1958 12.109 10.309 $ 76,075,865 67,370,230 8,705,635 2,762,943 321,775 11,790,353 1957 14.658 11.399 $107,473,568 92,042,828 15,430,740 2,042,879 639,177 18,112,796 1956 16.013 ! 13.494 $120,229,545 100,905,492 19,324,053 1,065,833 284.534 20,674,420 1955 15.138 12.299 $121,634,411 99,229,217 22,405,194 1,055,118 376,684 23,836,996 1954 14.054 10.681 $ 95,116,401 79,299,930 15,816,471 384,336 458,194 16,659,001 2,379,273 316,272 1,850,551 3,334,648 1,154,307 1,518,318 10,553,369 6,263,076 S 6.263,076 $2.10 2,312,741 -- 1,522,462 2,754,733 513.973 699,564 7,803,473 3,986,880 $ 3,986,880 $1.33 2,585,676 -- 561,676 2,935,632 118,833 3,884,706 10,086,523 8.026,273 $ 8,026,273 $2.69 2,373,017 -- 2,038,073 - 166,740 2,649,221 -- 5.194,085 10,383,063 10,291,357 75,107 2,608,753 6,385,243 11,107,176 12,729,820 $ 10,29,1,357 , $3.44 $ 12,729,820 $4.26 1,778,841 -- 344,756 2,466,711 -- 4,545,190 9,135,498 7,523,503 $ 7,523,503 $2.52 42 58 S 117,549,738 50,098,983 7,456,767 6.72 $ 79,064,194 $26.46 33 67 $107,679,085 45,791,438 5,786.183 7.91 $ 75,517.340 S25.27 42 58 $ 94,327,695 42,707,719 9,148,775 4.67 $ 74,246,682 $24.85 .... ,53 47 $ 85,320,288 49,625,248 1 1,383,335 4.36 $ 71,652,895 $23.98 54 46 $ 85,221,667 47,421,282 13,805,252 3.44 $ 69,510,204 $23.26 44 56 $ 76,851,556 39,868,612 10,354,058 3.85 $ 64,929,050 $21.73 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. St. Joseph Lead Company and Consolidated Subsidiaries WORKING CAPITAL ANALYSIS AND WORKING CAPITAL SOURCE Earnings .................................................... Provision for Depreciation and Depletion Lone-term Borrowings ............................. Sale of Investments.................................... Other, net........................ ......................... Total................................................ 1963 $ 9,903,773 3,897,981 _ - $13,801,754 1962 $ 4,319,873 3,538,848 3,000.000 -- '- $10,858,721 1961 $ 6,332,196 3,180,607 -- 8,549,758 179,429 $18,241,990 I960 $ 2,972,068 3,766,920 ~ -- $ 6,738,988 USE Dividends Paid: Shares outstanding at end of year......... Per share................................................ Amount.................................................. Capital Expenditures................................. Investments................................................ Repayment of Debt................................... Other, Net.................................................. Total................................................ Working Capital at End of Year............... 3,028,217 $1.25 $ 3,763,404 3,186,963 5,866,947 4,290,476 693,897 $17,801,687 $34,070,257 2,989,382 $1.00 S 2,717,622 3,750,014 4,634,987 4,290,476 905,790 $16,298,889 $38,070,190 2,717,322 $ 1.00 $ 2,717,247 2,445.243 3,554,516 3,707.143 -- $12,424,149 $43,510,358 2,7 ] 7.222 SI.00 $ 2,717,222 5,912,656 1,891,994 850.000 316,815 s:11.688.687 $37,692,517 GENERAL STATISTICS Number of Stockholders...................... United States Employees: Number.............................................. Salary and wage costs........................... Pension and Retirement Plans: Members............................................ Contributions..................................... Pensioners ......................................... Pension payments ............................. .. Deferred Profit Sharing Plan: Eligible employees............................ Contributions..................................... 8,772 3,621 $20,813,527 2,822 814,733 93*7 $ 496,194 687 297,113 10 8,986 3,774 $19,781,411 2,971 $ 939,017 920 $ 457,701 683 -- 9,740 3,871 $22,598,389 2,983 S 944.152 886 S 434,517 702 $ 189,966 10,651 4.171 $24,803,687 2,884 $ 1,049,557 8I`) S 355,782 698 -- Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. GENERAL. STATISTICS 1954-1963 , 1959 ' $ 6,263,076 ^ 3,334.648 * 5,000,000 ." . 1,509,628 ^ $16,107,352 1958 $ 3,986.880 2,754,733 15,000,000 -- 1,108,897 $22,850,510 1957 S 8.026.273 2.935.632 8,500.000 -- 399,130 $19,861,035 1956 $10,291,357 2,649,221 ...... -- 5,437,827 ; ,, $18,378,405 1955 $12,729,820 2,608,753 -- -- 406,682 $15,745,255 1954 $ 7,523,503 2,466,711 -- -- 1,209,462 $11,199,676 2,716,222 ' $ 1.00 ' $ 2.716,222 ' 9.283,290 ' 620.879 ' 850.000 ,-- [ $13,470,391 , $42,642,216 2,716,222 $1.00 $ 2,716,222 11,830.509 1.857,468 -- -- $16,404,199 $40,005,255 2.716,222 $2.00 $5,432,486 15,017,048 4,094,470 -- $24,544,004 $33,558,944 2,716,222 $3.00 $ S,14S,666 3,533,984 1,326,339 -- 743,533 $13,752,522 $38,241,913 2,716,222 $3.00 $ 8.148,666 2.237,015 1.258,098 -- -- $11,643,779 $33,616,030 2,716,222 $2.00 $ 5,432,076 1,125,743 540,481 -- -- $ 7,098,300 $29,514,554 * 11,812 4,263 * $22,670,522 * 2,816 ' $ 780,000 822 ` $ 331.550 . 682 - $ 187,892 13.315 4.581 $23,755,404 2.642 $ 826,19S 780 $ 303,019 693 -- 14,267 5,076 $27,832,266 2,776 S 800,928 710 $ 276.461 685 $ 240,788 13,219 5,213 $25,682,126 2,850 $ 2.170,872 , : 671 $ 254,942 662 $ , 308,741 11.263 10,497 5,101 $23,818,704 5,010 $21.975,110 2,772 $ 401,278 615 $ 248,998 2,717 $ 420.466 574 $ 243,129 ---- Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UNITED STATES LEAD STATISTICS IN SHORT TONS Available Supply: U. S. mine production .......................... ............ .... .. . From scrap..................................................... ............ Imports of concentrates and bullion (lead content) . . Metal imports (net) ................................................. . Total Lead Metal Available........ ....................... Consumption: Batteries ...................................................................... Ethyl gasoline.............................................................. Cables ........................................................................... Construction ................................................................ Pigments ....................................................................... Other uses..................................................................... Total Consumption...................................... .. Deficit.............................. ............................... .. ................ 1963 (Estimated) 251,000 517,000 120,000 222,000 1,110,000 440,000 195,000 60,000 133,000 107,000 245,000 1,180,000 70,000 1962 (Final) 237,000 470,000 132,000 222,000 1,061,000 420,000 169,000 57,000 122,000 103,000 239,000 1,110,000 49,000 ST. JOSEPH LEAD COMPANY LEAD STATISTICS in short tons Year 1954.......................... 1955.......................... 1956............. ........... 1957.......................... 1958___ ____.......... 1959.......................... 1960.......................... 1961................... 1962............... .......... 1963......................... Lead Concentrates Prodtti ed from Company's Mines 164,171 162,552 158,861 163,079 149,624 143,167 147,879 139,817 86,375 113,801 Lead Concentrates Purchased 39,373 43,100 44,353 46,309 25,102 8,300 13,656 4,927 4,453 2,773 Pitt Lead Equivalent of Produced and Purchased Concentrates 133.932 136,668 136,921 140,617 119,489 106,678 1 14,328 102,587 65,119 83,379 Piit Lead Prodto. turn 129,766 138,796 137,429 137,940 116.799 101,478 98.447 116,148 77,156 81,319 Put Lead Purchased 59,806 56,345 61,522 62,392 51,569 50,306 33,209 17 -- 10,357 Pitt Lead Sides /ndudinit 1954-1960 Sales' Under A Hem v Contrails 183,079 212,100 199,294 183.942 139,131 164,084 131,852 108,447 112,857 96,692 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UNITED STATES ZINC STATISTICS IN SHORT TONS : Available Supply: Recoverable U. S. mine production................. Less -- used to make pigments....... ............ ............ Recoverable domestic zinc available to metal smelters From scrap.................. ................................................ Imports of concentrates(recoverable zinc content).. Imports of slab zinc................................................... .. Total Zinc Metal Available........... 1963 (Estimated) ' 1962 (Final) 525,000 94,000 431,000 55,000 318,000 140,000 944,000 505,000 97,000 408,000 59,000 334,000 142,000 943,000 Consumption: Galvanizing .......................................................... Zinc-base alloys........................... Brass ................................................................. Rolled zinc ................................................................. Oxides .......................................................................... Other............................................................................ Total Consumption ..................... Exports ......................................................... Total Zinc Metal Consumed and Exported .... Deficit ................................ 420,000 461,000 130,000 41,000 18,000 30,000 1,100,000 35,000 1,135,000 **191,000 389,000 424,000 130,000 42,000 19,000 29,000 1,033,000 36,000 1,069,000 126*000 ST* JOSEPH LEAD COMPANY ZING STATISTICS in short tons Year Zinc Slab Zinc Concentrates Equivalent Produced of Produced from Zinc and Company's Concentrates Purchased Mines Purchased Concentrates Slab Zinc Equivalent of Smeller Production 1954 ... ......... 109,547 1955 . . . ........ 109,303 1956 ... ......... 114,138 1957 ... ......... 123,417 1958 . . . ......... 99,523 1959 . . . ......... 81,292 I960 ... ......... 128,762 1961 ... ......... 111,598 1962 ... ......... 104,080 1963 ... ......... 99,914 61,640 111,868 126,164 115,297 85,342 104,493 137,849 100,858 159,492 134,582 105,610 134,012 146,897 144,011 120,515 121,138 173,016 139,521 160,058 150,754 1 11,021 138,201 136,879 151,554 122,774 128,670 148,788 141,209 153,968 174,089 Purchased Zinc Zinc Sales Including 1954-1960 Sales Under Agency Contracts Purchased Zinc Concentrate Sales Sulphuric Acid Sales 49,93 1 65,822 48,672 56,613 46,453 44,334 26,730 8,511 4,709 6,726 167,542 202,545 181,324 192,112 174,083 179,478 158,276 162,005 147,744 170,415 -- -- __ 9,693 355 -- 3,076 12,490 30,110 42,296 147,076 183,609 190,004 204,255 171,938 176,607 186,722 194,327 189,866 211,930 13 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Compania IVlinera Aguilar, S. A. balance's ASSETS Argentine paper pesos (Note 1) Current Assets: 1963 1962 Cash .......................................................... 88,662,124 76,909,762 Marketable securities: Argentine Government (at cost).... 3,751,000 6,756,850 Other (at cost, less reserve--1963 and 1962, 19,493,471) ........... ............. 408,980,250 240,070,205 Loan receivable........................................ 10,000,000 -- Notes and accounts receivable--trade (less reserve-1963, 15,000,000; 1962, 12,834,535) ........................................ 161,602,250 112,199,721 Due from partly-owned company--trade. 153,527,176 35,149,101 Other accounts receivable, etc.................. 19,206,946 22,617,132 Inventories (Note 3): Lead and zinc concentrates................ 97,699,576 143,703,188 Materials and supplies......................... 235,164,260 1,178,593,582 279,141,938 916,547,897 Investments: Sulfacid, S.A. Industrial--Investment and Advances (atcost--50% owned) .... 134,418,835 Compania Metalurgica AustralArgentina, S.A. Comcrcial (at cost -- 43.3% owned) ............................... 8,746,356 143,165,191 85,929,135 8,746,356 94,675,491 Capital Assets (Note 2): Mining properties and mineral rights, including exploration and development prior to the commencement of operations ............................................. 63,133,687 Less accumulated depletion from January I, 1960 .................................... 14,487,365 Land, buildings, plant and equipment. .. 661,336,998 Less accumulated depreciation from January 1, 1960 .................................... 144.155,141 Deferred charges...................................... Total 48,646.322 517,181,857 22,820,936 1,910,407,888 63,133.687 11,035,580 611,642,870 52,098,107 102,718,981 508.923.889 13,067,089 1,585,312,473 See Notes to Ftnanaal Statements, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. E SHE ET DECEMBER 31. 1963 AND 1962 LIABILITIES AND STOCKHOLDERS' EQUITY Argentine paper pesos {Note I) Current Liabilities: Accounts payable -- trade...................... Due to St. Joseph Lead Company........... Due to partly-owned company............... Wages accrued................. ....................... Accrued Argentine income and other taxes . .......................................... Other accounts payable.......................... 1963 73,793,494 4,344,240 24,693,528 191,624; 142 11.185.163 305,640,567 19642 62,436,612 4,662,990 5,032,271 21,298,085 104,548,001 10,840,980 208,818,939 Advance from St. Joseph Lead Company .... 3,744,226 7,859,578 Deferred Credits -- Unearned interest, etc............................................ .. . .1 Reserves: Replacement of capital assets (Note 2). . Employees' compensation under Argentine social laws.......................... Accidents.................................................. Other ......................................................... 506,419,327 35.271.163 61,280,150 46,021,283 204,338 648,991,923 434,220,312 31,731,499 49,227,627 35,352,616 550,532,054 Stockholders' Equity: Capital Stock -- Nominal value of 80 Argentine paper pesos each: Authorized 5,000,000 shares Issued 4,700,000 shares................... 376,000,000 376,000,000 Other Capital (Notes 2 and 4): Arising from 1936 valuation of mining properties and mineral rights (remainder after transfer of pesos 48,000.000 to stated value of capital stock).......................... .. 1,446.736 1,446,736 Arising from 1960 revaluation of capital assets (remainder after transfer of pesos 106.400,000 to stated value of capital stock) .. .. 211,338,090 211,338,090 Arising from shares received from other companies (remainder after transfer of pesos 3,600,000 to stated value of capital stock) (Note 4). . 101,876,589 314,661,415 15,396,115 228,180,941 Retained Earnings: Appropriated for statutory reserve . . . 24,280,955 Unappropriated................................... 236,884,464 261,165,419 18,471,213 195,449,748 213,920,961 Total Stockholders' Equity ....... 951,826,834 818,101,902 Total..................................... 1,910,407,888 1,585,312,473 See Notes to Financial Statements. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Compania Minera Aguilar, S. A, STATEMENT OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1963 AND 1962 Net Sales . . Cost of Sales Other Income: Profit on exchange................................. Dividends ................................................ Profit from sale of marketable securities Interest ................................................. Sundry --net............... ............................ Total................................................. Deduct: Selling, general and administrative expenses.................................... Taxes, other than taxes on income............................................. Depreciation and depletion (Note 2)........................................ Total Deductions........................................................................... Income before Taxes on Income and Special Appropriation .................... Provision for Argentine Income and Extraordinary Profits Taxes, Net. . . Income before Special Appropriation........................................................ Special Appropriation for Replacement of Capital Assets (Note 2)........ Net Income for the Year (after special appropriation)............................. See Nates to Financial Statements. Argentine paper pesos (Note 1) 1963 1962 1,240,307,890 914,730,250 437.984,407 415,049,056 802,323,483 499,681,194 7,238,086 401,761 3,726,484 6,154,002 26,958,019 846,801,835 59,382,032 5,359,250 511,417 3,373,816 14,181,654 582,489,363 57,424,448 9,734,729 45,090,971 112,250,148 734,551,687 243,223,670 491,328,017 72,199,015 419,129,002 30.929,526 16,759,954 42,583,865 90,273,345 492,216,018 133,557,247 358,658,771 69,771,685 288,887.086 STATEMENT OF UNAPPROPRIATED RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1963 AND 1962 Unappropriated Retained Earnings at Beginning of the Year . Add -- Net Income for the year (after special appropriation). Deduct: _ Dividends paid during the year -- cash ........... ........................... Appropriation for statutory reserve.................. * ......................... Total Deductions........................................................................... Unappropriated Retained Earnings at End of the Year........................... See Notes to Financial Statements. Argentine paper pesos (Note 1) 1963 1962 195,449,748 185,834,927 419,129,002 288,887,086 614,578,750 474,722,013 371,884,544 5,809,742 377,694,286 236,884,464 274,952,500 4.319,765 279,272,265 195,449,748 16 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Compania Minera Aguilar, S. A. NOTES TO FINANCIAL STATEMENTS 1. The quoted free rate of exchange for a peso was approximately 0.75 cents at December 31, 1963 and December 31, 1962. 2. As of January I, 1960 capital assets were subject to a revaluation as permitted by Argentine Law No. 15,272.The total appreciation of pesos393,738,090 was applied to mining properties and mineral rights (pesos 52,489,454) and to land, buildings, plant and equipment (pesos 341,248.636); concurrently an equal amount was credited to other capital -- arising from revaluation. At their revalued amount, net capital assets are still considered by the Com pany to be stated at less than present value. The method of revaluation in terms of the Law consists of deducting from original cost the accu mulated depletion or depreciation to the date of re valuation, and adding to such net figure the amount of appreciation permitted by the Law. For account ing purposes in Argentina, the resulting total is the basis for providing depletion or depreciation which, under the terms of the Law, is calculated on the basis of extending the useful life originally assigned to each capital asset by fifty percent. Additions sub sequent to the revaluation arc being depreciated. over the estimated useful life previously assigned to each asset. Accordingly, the capital assets at December 31, 1963 and 1962 are stated at the net aggregate amounts of cost, less depletion or depreciation to January I, 1960, plus the amounts added for the revaluations at that date, and the allowances for de pletion or depreciation are the amounts accumu lated since the revaluation date. Following the practice of prior years a special appropriation of pesos 72,199,015 for replacement of capital assets has been made out of income for the year 1963. Similar special appropriations were made out of income in the preceding twelve years aggregating pesos 416,801,970. 3. The inventories were valued at cost determined principally on the LIFO basis. 4. Shares totaling pesos 86,480,474 (1962, pesos 15.071,334) received from other companies as a result of their capitalizing the appreciation arising on revaluation of capital assets under Argentine Law No. 15,272 have, in accordance with the Law, been credited to Other Capital. 17 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ACCOUNTANTS' OPINION DELOITTE, PLENDER, HASKSNS & SELLS AV ROQUE SAENZ PENA 788 BUENOS AIRES St, Joseph Lead Company: We have examined the balance sheet of Compania Mincra Aguilar, S.A (incorporated and doing business in Argentina) as of December 31, 1963 and the related statements of income and unappropriated retained earnings for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the ac counting records and such other auditing procedures as we con sidered necessary in the circumstances. In our opinion, the accompanying balance sheet and the statements of income and unappropriated retained earnings pre sent fairly the financial position of Compania Minera Aguilar, S.A. at December 31, 1963 and the results of its operations for the year then ended, in conformity with accounting principles gen erally accepted in Argentina and applied on a basis consistent with that of the preceding year. The accounting for capital assets and related depletion and depreciation, stock dividends, and special appropriations out of income for replacement of capital assets, as described in Notes 2 and 4 to Financial Statements, differs from that normally ac cepted in the United States of America. However, in all other material respects the accompanying financial statements, in our opinion, have been prepared in conformity with accounting prin ciples generally accepted in the United States of America. DELOITTE, PLENDER, HASKINS & SELLS February 13, 1964 8 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 office 250 Park Avenue, New York 17, N, Y. BOARD OF TRUSTEES YEAR ELECTED Andrew Fletcher* .................................................. ................................................ ......................................Chairman George 1. Brigden*............................. .Retired Vice President and Treasurer, St. Joseph Lead Company Francis Cameron*-.......................................................................................................................................... President Bernard F. Desloge ..................................................... Vice President, Minerva Oil Co., St. Louis, Missouri Eli Whitney Debevoise-*................. ............. ......... Debevoise, Plimpton, Lyons & Gates, New York, N. Y. James W. McAfee........................ President, Union Electric Company of Missouri, Si. Louis, Missouri David R. Calhoun............................................................... . President, St. Louis Union Trust Company Charles R. lnce.................................................................... ...................... ..................... Vice President -- Sales Joseph Pursglove, Jr............. ................................... Vice President, Consolidation Coal Co., Pittsburgh, Pa. Plato Malozcmoff...................................................................... ...... President, Newmont Mining Corporation Guido F. Verbeck, Jr.................. Senior Vice President, Morgan Guaranty Trust Company of New York Elmer A. Jones.................................... ............. .....................Division Manager, St. Joseph Lead Company Lawrason Riggs 111'"...................... .....................................................................................................Vice President *Member of Execwive Committee EXECUTIVE OFFICERS 1921 1944 1953 1953 1954 1954 1957 1958 1959 1961 1961 1963 1963 Andrew Fletcher, Chairman Francis Cameron, President Charles R. lnce, Vice President -- Sales Robert H. Ramsey, Vice President Lawrason Riggs III, Vice President John R. Englehorn, Assistant to the President James G. Colvin, Treasurer Donold K. Lourie, Secretary William L. Murphy, Jr., Comptroller William J. Elliott, Assistant Secretary Edward R Merrell, Assistant Treasurer MANAGER OF EXPLORATIONS Norman H. Donald, Jr. UNITED STATES DIVISION MANAGERS Mines Elmer A. Jones, Southeast Missouri Marshall G. Jones, Balmat-Edwards, N. Y. Smelters John W. Sherman, Herculaneum,-Missouri Charles D. Henderson, Josephtown, Pennsylvania CIA. MINERA AGUILAR, S. A., ARGENTINA Wing L, Lew, Managing Director CIA. MINERALES SANTANDER, INC., PERU Clinton L. Miller, General Manager MERAMEC MINING COMPANY Robert G. Pects, Resident Manager GENERAL COUNSEL Debevoise, Plimpton, Lyons & Gates 320 Park Avenue, New York 22, N. Y. TRANSFER OFFICE St. Joseph Lead Company . 250 Park Avenue, New York 17, N. Y. AUDITORS Haskins & Sells Two Broadway, New York 4, N. Y. REGISTRAR First National City Trust Company 22 William Street, New York 5, N. V. T** ' Printed in U.S.A. ,' I , < Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.