Document KRnKaK9pLgbe81R34JDNz9qeo

REPORT / tin Anaconda Copper Mining Company N11522 PNYC000o 982Z Anaconda Copper Mining Company CAPITAL STOCK Authorized and Issued, 3,000,000 shares, $50 each.................... $150,000,000 OFFICERS Chairman of the Board JOHN D. RYAN President...............................CORNELIUS F. KELLEY Vice-President........................ B. B. THAYER Secretary and Treasurer . A. H. MELIN General Auditor . ... f.T. ROBERTS Assistant Secretary . R. D. COLE Assistant Treasurer D. B. HENNESSY DIRECTORS William Rockefeller B. B. Thayer George H. Church Nicholas F. Brady John D. Ryan Cornelius F. Kelley Charles F. Brooker Andrew J. Miller A. H. Melin OFFICES An a c o n d a, Mo n t a n a 25 Bio a d w a y , Ne w Yo u : PNYCCQ0Q9B23 To the Shareholders of the Anaconda Copper Mining Company: An available supply of copper far in excess of the demand for consumption resulted. in the demoralization of the industry during the year 1921. The industrial depression that had become acute in the last quarter of 1920, con tinued beyond the first df the year, resulting in a greatly restricted demand. The sur plus stocks resulting from the, sudden termination of the war, and which had been carried over, showed no substantial; decrease during the year, as production had been maintained at a level about equal to current consumption. Quantities of copper and brass scrap continued to be marketed. The result was a rapid increase during the first quarter, of refinery stocks. The market price for the metal declined to less than 12 cents a pound, while the cost of production remainedrelatively high, due to prevailing wages, freight rates, and the cost of supplies. To meet the' situation a suspension of operations was unavoidable, and accordingly the Company's; production ceased about April 1st, the mines remaining closed to the end of the year. Notwithstanding similar action was taken by nearly all of the larger producers, refinery stocks continued to increase until May, due to the refining of blister copper produced prior to the, shutdown. From May to the dose of the year stocks showed a gradual dedine, production from mines in the United States having been reduced to less than 20% of the normal operating maximum. The price continued low, declining to about; 11.63c per lb. in August, then gradually advandng to about 14 cents at the dose of the year. Under these conditions it was impossible to avoid sustaining a heavy loss during the year. The aggregate of ail items entering into the profit and loss statement is $16,999,555.19, which upon analysis is shown to be due to the following general causes; (a) $3,188745,34;resulting from marketing metals in the liquidation of stocks at prices bdow the cost of production and carrying charges as set up in the inventory of December 31, 1920. (b) $2,886,637.26 from the adjustment of inventories of copper, lead and zinc to the respective market price of these metals at December 31, 1921. (c) $5843,66920; was due to interest, bond discount and depredation charges. (d) $5,680,503.39 was expended during the non-operating period for mainten ance of the property! and necessary organization. Included in this amount are the sums expended in the various communities, either solely or largely dependent upon the oper ations of yoor Company, for the relief of former employees and their families. Convinced that in order to protect the business of the Company, it should be placed in a position to control the outlets of ifi metals and to promote the sale and dis- 3 PNfC0C0098 tribution of copper and brass products, negotiations were initiated for the purchase of the shares of The American Brass Company. You have heretofore been advised of the details of this transaction. You are now informed that it was consummated February 10, 1922, when more than ninety-nine percent (99%) of the Brass shares were acquired by your Company and its subsidiary, the United Metals Selling Company. Upon its becoming assured that these negotiations would be successful, operations were resumed1, the mines starting production January 16, 1922. An interesting development; resulting from the efforts to promote the use of both copper and zinc, ha3 been the perfection of the Anaconda, metal shingle. Roofing is a use for which copper and iir.c, particularly the former, are peculiarly adapted. Here tofore, the cost of sheet copper and the difficulty of securing its proper application to roofs, has greatly retarded; itsfuse. ^he: Anaconda-shingle,(Isoldes the problem. Although not perfected; until October,, art: operating '(plant'and selling organization have been developed, and the, product is now being marketed. Following is a summary of operations conducted during the year. Copper Department Mb m Operations at Butte were conducted on a restricted scale during the first three months of the year. There were mined 3$3,055.50 wet tons of ore and 8,115.6+ tons of precipitates were produced. Concentrator and Smeitar At the concentrator there were treated 373,409.81 tons of ore, 43,053.12 tons of slimes from the ponds, and 224,576.90 tons of tailings. The Leaching Plant treated 148,900 tons of tailings, from which there were pro duced 841.68 tons of cement copper. The Anaconda Smelter, including the Concentrator, treated for all companies 456,492.78 tons of ore. Of the total amount, 395,238.51 tons of ore were produced by the mines of the Company; 5420027 tons of ore were either purchased from or treated for other companies; and 7,054.00 tons of material were from the old plants at Anaconda and Butte. No copper ores were treated at Great Falls except a snail tonnage of con centrates from Anaconda used for the fluxing of zinc plant residue. Than were produced 36257,591 pounds of fine copper, 2269,87523 ounces of silver, and 8225.890 ounces gold. Of this production, 32267,345 pounds fine copper, 2,137,06225 dunces silver, and 8,618.538 ounces gold were produced for your Company. Rafinariaa The refinery at Great Falls produced during the year, 41,8+2,790 pounds of cathodes, all of which were melted into shapes at that point. The refinery of the Raritan Copper Works at Perth Amboy, N. J., produced for all companies, 169/00,3W pounds fine copper, 10,370334.03 ounces silver, and 51,473.676 ounces gold. 4 o PNYCOC009828 Rod and Wire Mill Operations at the Rod Mill, which were reduced from a two shift basis April 1st to a one shift basis, were further reduced August 1st to a basis of three shifts per week, and entirely suspended on October 19th. The total production of rods for the year was 42,435,436 pounds. Of this amount 17,635,512 pounds were manufactured into wire, of which 12,393,221 pounds were made into strand. The operations of the Wire Mill con tinued throughout the year, but on a reduced basis. Zinc Department Mine* From the Butte Mines of the Compiny there ware produced 58.244,65 wet tons of zinc ore. Redaction Worlu The plants at Anaconda and Great Falls treated 126,514.59 tons of age and other zinciferous material. Of this amount. 76,435-30 tons of ore were produced hy the mines of the Company, and 50,079.29 tons of ore and concentrates were purchased. The electrolytic plant at Great Falls produced 22,684,264 pounds zinc, 622273 pounds zinc in dross; and residue from which there were produced 12,008,332 pounds lead, 1,312,379 pounds copper, 2,055,939.48 ounces silver, and 5268756 ounces gold. Miscellaneous Products ImilMr The sawmills at Bonner and Hope cut 39.832,619 feet of lumber and purchased 241,454 feet, of which 13276760 feet were shipped to the departments of the Company, 20,422,673 feet were sold commercially, the major portion going to eastern points, 300,565 feet were used at the mills for repairs and construction, and 1,552223 feet were supplied to the factory for manufacturing, or a total disposition of 35,552221 feet; increasing the stocks of finished lumber pn hand by 4,521,852 feet; leaving a balance on hand at December 31st, 1921, of 52,940,513 feet. Coal At Dismondville, Wyoming, there were produced 292,83375 tons of coal, 87,592.55 tons of which were shipped to other departments of the Company, 168,093.90 tons were sold commercially and 37,147.30 tons were used at the coal mines. At Washoe, Montana, there were produced 136,576.20 tons of coal, 44,033.40 tons were shipped to other departments of the Company, 86,632.80 tons were sold com mercially and 5,910.00 tons were used at the coal mine*. At Sand Coulee, Montana, there were produced 21201.85 tons of coal, 17,614.50 tons were shipped to other departments of the Company, 3,479.35 tons were sold com mercially, and 108.00 tons were used at the coal mines. J PN If C 00009626 Arsenic As a by-product of copper smelting operations there were produced 2,467.352 pounds of arsenic, of which 1,055.281 pounds were refined, assaying more than 99% Arsenious Oxide. Sales during the year amounted to 1,888,294 pounds at an average price of 7 cents per pound, of which 1,403,014 pounds were crude and 485 250 pounds were refined. Sulphuric Add The sulphuric acid plant at Anaconda produced 13,562.54 tons of sulphuric acid, averaging 60 Deg. Beaume. This was supplied to the flotation and leaching plants. Fertiliser In order to utilize the excess capacity for the production of sulphuric acid at Anaconda, the Company has entered into the fertilizer field. The phosphate rock treated with sulphuric acid is converted into a product known to the trade as "Treble-Super phosphate," ccmtainihg approximately 48%: phosphoric acid. This department is as yet in a state of development. The mines at Conda, Idaho, produced 4,078.70 tons of rock, averaging 32.31% ' P205. The rock crushing plant, together with facilities for mining and shipping rock, were practically completed by the end of the year. The small pilot phosphate plant at Anaconda treated 5,431.57 tons of rock, averaging 32.2% P205, of which 2,122.74 tons were produced by the mines and! 3,306.83 tons were purchased, from which there were produced 1,805.30 long tons of Treble Superphosphate, averaging 45,99% P205. Butte, Anacoodlt & Pacific Railway Company The Railway transported 1,079,160 tons of ore and other freight, and 152,592 passengers. The gross revenues were $610,383.34; rental and miscellaneous receipts $14,863.86; operating expenses $724,536.82; taxes, interest and rental of leased lines, $239,600.93; net loss, $338,890.55. International Smelting Company International, Utah The Copper Plant was closed down daring the entire year. The Lend Plant operated on a curtailed basis until July 5th, during which time there were treated 61207.45 tons of ore, from which there were produced 9216,564 pounds of fine lead, 1281258 pounds of fine copper, 1,529,565.96 ounces silver and 4,297.051 ounces gold. A general dean-up of flue dust and other by-products resulted in production of 1,006,066 pounds of arsenic. The operations of the Tooele Valley Railway Company were continued through out the year. The Railway handled during the year 70,100 tons of ore and miscellaneous freight 6 PNYC00009B*7 I Miami. Arizona The smelter at Miami was down from, April 23d until November 17th, when operations were resumed to treat the accumulated concentrates shipped by the Miami Copper Company. There were treated during the year 104,654.28 tons ,of concentrates and purchased ores, from which there were produced 50,818,537 pounds of fine copper, 120,897.19- ounces silver, and 1.258.185 ounces, gold. International Lead Refining Company The refinery at East Chicago, Ludsana, treated 7,974.68 tons of !e?d bullion from the Tooele Plant, and 3,268.31 tons of purchased ore and bullion, from which there were produced 20,683,128 pounds common lead. 914.875 pounds antimonial lead, 2,612,959.96 ouhces silver, and. 9,020.993 ounces gold. Anaconda Lead Product* Company The plant was shut down from March 15th to October 16th. There were pro duced during the year 4,601,553 pounds of white lead; sales amounting to 5,559,418 pounds materially reduced the stocks on hand. The plant is now on an operating basis of about 20 tons of white lead daily. Walker Mining Company Mining operations except development work at the Walker Mine and mill were discontinued throughout the year. The ore reserves at the end of the year were esti mated at 900,000 tons, averaging 4.2% copper, carrying also values in silver and gold. The tramway to Spring Garden was completed. There are on hand at the mill more than 7,600 tons of concentrates, assaying 19.76% copper, 7.46 ozs. silver per ton, and .19 ozs. gold per ton, which will be shipped to Tooele when smelting operations are resumed. Arizona Oil Company During the year the Arizona Oil Company produced 328,574 barrels of oil. Pro duction was lower than in previous years, due to a strike of employees throughout the California oil fields, resulting in a temporary close-down of practically all companies operating in tbs Bakersfield district. Dividends of $13.70 per share were paid, your t Company receiving $111792.00 from this source. . . South America Andes Copper Mating Company Curtailment of Operations at Potrerillos went into effect at the beginning of the year, and in consequence the development work done was less than that of the previous year. 7 9 tj2-d p *ic o 0 Development Cham drilling to the extent of 4,840 feet was done during the year. There were added to the ore reserves 10,628,006 tons, averaging 1.493% copper. T(t >s additional ore was sulphide ore without superimposed oxides. The total ore re serves at the end of the year were 138,890,509 tons, having a copper content of 1.498%. The amount of work done in drifts, raises and winzes was 11,945 feet. The main adit was advanced ninety-seven feet. The large flow of water men tioned in last year's report decreased to approximately 1,590 gallons per minute. ... . . Wci= Ssppfc- -Vo work was done during the year on the La Ola pipe line. Potrarilloe Railway The Potrerillos Railway, consisting of the main line from Pueblo Hundido to the townsite of Potrerillos, and the line connecting Barquito with the Chilean State Rail road at Chanaral, was operated satisfactorily during the year. Proparty Additional acreage was taken up in the year 1921, making a total of 273,241 acres owned by the Company. Construction Construction work was limited to the completion of houses partially finished. Installation of a pilot unit of sulphur dioxide precipitation was begun April 1st, the balance of the experimental plant being shut down until September 15th. On Sep tember 15th experimental work was resumed on the entire plant and continued through out the year with satisfactory results. Santiago Mining Company Lo Agmm Mae No development was done at Lo Aguirre during the year. A mhil estimate of ore reserves follows: Oxide ......................................................... .............................. Mixed Ore ............................................................................................... Sulphide Ore ._--..... ............................. ................... ............................- Tons 4,221,819 2353,838 1774,843 % Copper 1717 2.120 2.405 Total_____ 8350,500 1.986 There is an extension of; the ore bodies in the west section of the property which has not been sufficiently developed to accurately determine and classify the ore existing there. An estimate of this probable ore copses to 41,181,598 tons, containing 2.84% copper. 8 at' COO"0' African* Mina The total development for the year was 3,685 feet, consisting of drifts, crosscuts and raises. All development work in the mine was suspended on May 15th. The ore reserves on May 15th, 1921, showed an increase of 385,889 short tons, aver aging 3.304% copper, the total ore reserves being 2,687,184 tons, having a copper content of 3.655%. By reason of curtailment of South American activities the entire operation of the Santiago Mining Company was shut down to the extent of leaving only a force of watchmen under cGiupCitaL supervision. investments During the year your Company increased its holdings of stock of the Inspiration Consolidated Copper Company from 285,300 shares to 297,300 shares. A corporation known as the Zonia Copper Company was organized for the purpose of undertaking the development of a group of mining claims in Yavapai County, Arizona, upon which options had been secured for your Company, the Inspiration Consolidated Cop per Company and individuals. Thirty-nine Thousand (39,000) shares of the stock of this Company were issued, the par Ten Dollars ($10.00) each, of which amount your Company subscribed for Thirteen Thousand (13,000) shares. A shaft was sunk 874 feet and cross cuts run to determine whether or not the pro ierty had value. The result was disappointing; work was stopped and the options on the property surrendered. After all expenses have been paid there will remain about Twenty Thousand Dollars ($20,000.00), together with the salvage value of the equipment, machinery, supplies, etc., to be distributed to the stockholders. Financial Condition and Plans Since the increase in its authorized capital stock in 1910, this Company has expanded and integrated its holdings and operations to such an extent that h has changed from a large and important copper mining enterprise, conducted almost entirely within the State of Mon tana, to one owning and operating mines and industries in many States of this country, and has acquired large and valuable properties in South America. It acquired in 1910 the greater port of the known profitable ares of the Butte District in which its oejjjoel properties are located, and your officers soon came to die realization that control o( tbo refining end selling of its product was necessary to the proper conduct of the business fed's* then doing. In pursuance of this policy, the Eastern refineries of the International Smelting and Refining Company at Perth Amboy, N. J., were bought, as were also the copper and lead smelting plants of that Company at Tooele, Utah, the lead refinery at East Chicago, Indians, and the copper smelter at Inspiration, upon which construction had been begun. The stock of the United Metals Selling Company was acquired, and investments in other companies were made at an aggregate cost of $41,042,750.17. In order to acquire an additional supply of ore extensive exploration was undertaken, as a result of which the val uable South American properties were acquired. A campaign of reconstruction and exten- 9 PNYC00009B30 sion of plants was undertaken and consummated. An additional electrolytic refinery at Great Falls was constructed. The Company entered the zinc producing field, bringing into operation a new electrolytic process worked out (sy its engineers, A zinc concentrator was constructed at Anaconda, and an electrolytic zinc plant at Great Falls, capable of producing 120,00(3,000 lbs. of high grade zinc; per year, was'built. These extensions have added greatly to the value of the property. Having possessed itself with the necessary facilities for the mining and production of copper, zinc and precious metals,, the Company determined, in order to market its product continuously and to the best advantage, to enter!,the fabricating field. The;result;of these activities has been to bring into existence an integrated industrial enterprise possessing com plete facilities for producing,from! mine and distributing to ijpnsumer, copper* zinp apd brass products in quantity, constituting a substantial proportion oil the world's, business in these products. In accomplishing this expansion of the Company, the directors and Officers have en deavored to build for the future, and to follow a, conservative policy in the capitalization of acquisitions and in the creation of funded debt, although conscious of the fact that in so doing the present stockholders of the Company were carrying a proportion of the expense that might justly be regarded as unduly burdensome. The growth of the Company is best summarized by a comparison of assets carried to the balance sheet during the period. At December 31st, 1909, the end of the year prior to consolidation, the net book value of the Company's assets was $34,679,216.09. To December 31st, 1921, there was an increase to a net book value of $236,839,025.09, an addition of $202,159,809.00. These figures do not include the purchase of the American Brass shares. Payment has been made for the assets acquired by issuing stock at par............................................................................ $86,562,500.00 and outstanding bonds............................................................................................ 49201,700.00 Total............................. $135,764,200.00 The balance, a sum of $66,395,609.00, has been obtained from re-investing earnings of the Company above the amount declared as dividends, which during this period aggregated $128,873,125.00. Development of the Potrerillos Mines has added to the known extent of the ore body and has indicated the presence of sulphides richer in grade and of greater tonnage than had been anticipated. This fact has caused a modification in the plan of plant and equipment for the property. These changes involved no sacrifice of any expenditure already made, but will require taftf turns to carry the property to adequate production. The purpose to be attained will ha to bring into realized profit more quickly the result of mining the richer ores more lately developed. Further details of the property will be found in an appropriate place in the report. A consideration of the matters briefly referred to in this review of the Company and its future requirements, has induced the directors to believe that the Company's policy should be to provide itself with the additional capital that will be required, by adopting a plan of financing, so that the future may carry its share of. the undertaking, 10 PNYC00009831 and the Company be. placed in a position to resume the payment of dividends as soon as a general improvement in the metal market warrants. The present requirements are not large*: but the expenditures which will be distributed Over a number of years, and the retarding of the outstanding issue of bonds, if desired, should be provided for. The de tails of the plan are now being worked out and will be submitted to you as soon as com pleted, for approval, before any action is taken. Advantage .is taken of the issuance of the annual report to make this preliminary statement that you may be informed of what is under consideration. Attached hereto you will find a consolidated balance sheet showing the financial condition of the Company and its Subsidiary Corporations, at the close of business December 31, 1921, and an income statement for the year, both certified to by Messrs. Pogson, Peloubet St Company, Certified Public Accountants. JOHN D. RYAN, Chairman of the Board. New York, N. Y., May 2, 1922. CORNELIUS F. KELLEY. President. 11 PNYC00009d32 ANACONDA COPPER MINING COMPANY imd Subsiduiry Companies Consolidated Balance Sheet--3Jet December, 1921 ASSETS Fix k p :. Mines and Mining Oaims, Coal Mines, Timber Lands, Water Rights and Lands for Reduction Works and Refineries, etc. .............................................................. $119,438,110.62 Buildings and Machinery at Mines, Reduction Works, Refineries, Sawmills, Foundries, Waterworks, Railroads, Manufacturing Plants, etc........................ 76,285,349.17 Investments in sundry companies...................................... 16,496,444.04 ----------------------- $212,220,103.83 CuiiBNT: Supplies on hand, advances on Ores and Expenses prepaid .............. ........................................................... $21,989,306.50 Metals and Manufactured Products in process and on hand--at the lower of cost or market........................ 17,817,363.59 Accounts Receivable and Cash Assets.............................. 21,235,831.13 61,042,50122 $273262,605.05 We ham siaarinert into the affairs of the Anaconda Copper Mining Company and of its Subsidiary Companies and ban verified the Assets, Liabilities and Loss shown above. The Net Loss is after de ducting all Development expenditure of the year. Depletion of Coal and Timber Lands and Depre ciation of Planta and Equipment. We hereby certify that this Balance Sheet shews the financial condition at 31st December, 1921, of the Companies aa aa aggregate whole, and that the accompanying Income Account for the year end ing list December, 1921, is correct aa stated. __ __ POGSON, PELOUBET ft CO, Certified Public Accoustmti. New York and Butte, 20th April, 19221 12 PNYC0Q009833 i ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Balance Sheet--31st December, 1921 LIABILITIES t Ca p it a l St o c k o Annccnds Copper Miner? Company: Authorized--3,000,000 shares of $50.00 each; issued-- 2,331,250 shares............................................................ Min o r it y In t er es t s in Subsidiary Companies........................ Te n Ye a r Se c u r e d Go l d Bo n d s , due 1st January, 1929: Authorized--$50,000,000,00 Outstanding ................ ................................................ ....... Res er v e f o r De p r e c iat io n .... ................................................. $116,562,500.00 2,436095.12 49,201,700,00 24,182,834,37 Cu r r e n t : Accounts and Wages Payable and Taxes and Interest Accrued 13,075,368.31 Su r p l u s : Balance 31st December, 1920....... $84753,462.44 Net Loss for the year ending 31st December, 1921, per Income Account annexed....... ................................... . 16799,555.19 6775370775 $273762,605.05 t V Non.--In order to comply with the Gorcnuacm Income Tax requirement* for the***** putinf depletion* aa additional valuation of the mining property as of let March. 1913, ^m isnm neor^A upon the of the Company; tot. for the sake of uniformity, the molt of thorn mtriee has been omitted from the current statements. 13 PHXCOOOO^ CS.Ti|s*as|t|a3^ ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Income Account--Year Ending 31st December, 1921 EXPENSE ^ Meats and Manufactured Products in process and on hand at beginning of year .............. ..................................................................................,.................. $30,516,880.05 Mining, including Development.............................................................................. 3,786,076.51 Ore Purchases ........................................................................................................ 3,957,200.16 Reduction, including Transportation of Ore..................................................... 5,119,253.62 Refining and Selling, including Transportation of Meals.............................. . 1,250,676.43 Manufacturing Expenses, including Selling........................................................ 5,337,188.60 Administration and Federal Taxes........................................................................ 1,220,361.50 $57,187,636.87 Balance brought down............................................................................................ Amount charged off this year for Depredation and Obsolescence................. Interest, induding discount on bonds.................................................................... Expenditure during suspension of operations............ ....................................... $6,257,042.38 2,135,401.31 3,106,267.89 5,680,503.39 $17,181,214.97 14 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Income Account--Year Ending 31at December, 1921 INCOME Sales of Metals and Manufactured Products...................................................... $31,097,213.90 Royalties, Tolls, Rentals, etc............ ........................................................ ............. 2,016,017.00 Metals and Manufactured Products in process and on hand at end of year.... 17,817,363.59 Balance carried down............................. --1....... ............................................... . 6,257,042.38 $57,187,636.87 Income from Investments in sundry companies.................................................... Balance, Net Loss: Apportioned to . Minority Interests........... ........................ $61,634.00 Carried to foregoing Balance Sheet................................. 16,999,555.19 -------------------- $120,025.78 17,061,189.19 $17,181^1497 15 PNtC00CC9a36