Document YD175YNk3v6Kp4Lw770p7aa3D

Saint Joseph Lead Company Annual Report -- 1960 America's Corporate Foundation; 1960; ProQuest Historical Annual Reports PS. o 1 ' Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Proxies for Annual Meeting This Report is sent to Stockholders of the Company in advance of the solicitation by the Hoard of Trustees of proxies for the Annual Meeting of Stockholders to be held on May 8. 1961 at il A.M. ' _ , , Pi oxies will be solicited commencing on April 7, 1961. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. TABLE OF CONTENTS Pase Trustees and Officers. 3 Highlights............................................................................................................ 4 Lead and Zinc Markets . . 5 Earnings.............................................................................. 6 Taxes on Income................................................. 6 Dividends............................................ 7 Long-Term Debt................................................. 7 Working Capital.......................................................... 7 Capital Expenditures........................................................................................ 8 Southeast Missouri.............................................................................................. 8 Edwards-Balmat, New York............................. 8 Josephtown, Pennsylvania .................................................................................... 8 Mine La Motte Corporation.................................. 8 Employee Relations: Employment and Payrolls......................................................................... Pension Program . Deferred Profit Sharing Plan Stock Option Incentive Plan......................................................................... 9 9 9 9 Progress in New Areas: Viburnum Lead Project........................................... Meramec Mining Company .......................................................................... Oil Leases--Crockett County, Texas . . ...................................................... 9 10 10 North Africa....................................... 10 Canada--Brunswick Mining and Smelting Corporation, Limited.................... 10 Argentina: Cia. Minera Aguilar, S. A....................... ,................................................ Sulfacid, S. A. ....... ................................. Cia. Metalurgica Austral-Argentina, S. A..................................................... Peru--Cia. Minerales Santander, Inc. . . 10 11 11 11 Anti-Trust Suit................................................................................................... Annual Meeting.................................................................... Organization Changes....................................... Annual Report to Employees.............................................................................. 11 12 12 12 Stockholders....................................................................................................... 12 Conclusion............................................................................................................ 12 Lead and Zinc Statistics............................. 13-14 Financial Statements and Accountants' Reports ......................................................15-23 General Counsel Debevosse, Plimpton & McLean 20 Exchange Place New York 5, N. Y. Auditors Haskins Sr Sells Two Broadway : : : New York 4, N. Y. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH''LEAD COMPANY INCORPORATED MARCH 25, 1864, UNDER THE LAWS OF THE STATE OF NEW YORK , - . . iV .. v .... 250 PARK. AVENUE NEW YORK '17'' N:'f. 4 * *' Jf BOARD OF TRUSTEES Year Elected Ikwin H. Cornell..........................................Vice President, Cornell Iron Works,New York, N. Y, 1913 Andrew Fletcher................................................................................................................Chairman 1921 C, Merrill Ciiapin, Jr................. .... Retired Vice President, St. Joseph Lead Company 1933 George I. Bricden..............................................Financial Consultant, Si. Joseph Lead Company 1945 Francis Cameron......................................... ...................................................... President 1953 Bernard F. Desloge......................... .... Vice President, Minerva Oil Co., Sl Louis, Missouri 1953 Eli Whitney Debevoise.....................................Debevoise, Plimpton & McLean, New York, N. Y. 1954 James W. McAfee...................President, Union Electric Company of Missouri, St, Louis, Missouri 1954 David R. Calhoun....................................................... President, Si. Louis Union Trust Company 1957 Charles R. Ince ......................................................................Vice President arid Sales Manager 1958 Joseph Pursglove. Jr............................... Vice President, Consolidation Coal Co., Pittsburgh, Pa. 1959 Plato Malozemoff....................................................... President, Newmont Mining Corporation 1961 Guido F. Verbeck. 3r. . . Senior Vice President, Morgan Guaranty Trust Company of New York 1961 George I. Brigden Francis Cameron EXECUTIVE COMMITTEE Andrew Fletcher, Chairman \ : '? : i ! ' : Irwin H. Cornell Eli Whitney Debevoise EXECUTIVE OFFICERS Andrew Fletcher. Chairman Francis Cameron, President James G. Colvin, Treasurer Charles R. Ince, Vice President DonoldK. Lourie, Secretary and Sales Manager William L. Murphy, Jr., Comptroller Robert H. Ramsey, Vice President William J. Elliott, Assistant Secretary Lawrason Riggs III. Vice President 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, Edwards-Balmat. N. Y. Smelters John G.Wehn, Josephtown, Pennsylvania John W. Sherman, Herculaneum,Missouri Consultants George I. Bricden, Finance William T. Isbell, Research Rene J. Mechin. South America Cia. Minera Aguilar, S. A., Argentina Wing L. Lew, Managing Director 3 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST," JOSEPH LEAD COMPANY highlights 1960 1959 Sales of metals, etc...................... $79,634,096 Federal income taxes . .... . . . $326,930 Net earnings (after taxes)............................... $2,972,068 Dividends paid................................................... 82,717,222 Shares of capital stock outstanding . . . . 2,717,222 $86,179,208 $1,518,318 $6,263,076 $2,716,222 2,716,222 Per share on capital stock: Taxes on income.......................................... Net earnings . .......................................... Dividends .................................................... Current assets............................................... Current liabilities.......................................... Net current assets.......................................... Ratio of current assets to current liabilities . Long-term debt............................................... Cash.................... ..... Short-term marketable securities .... Capital expenditures..................................... Number of employees . . ........................... Number of stockholders . . . . . . . Stockholders' investment in the business: Total . .................................................... Per share.................................................... $0.12 $1.09 $1.00 $45,178,167 $ 7,485,650 $37,692,517 6.04 to 1 $26,800,000 $4,047,224 $9,545,000 $5,802,333 4,171 10,651 $79,349,540 $29.20 $0.56 $2.30 $1.00 $50,098,983 $ 7,456,767 $42,642,216 6.72 to 1 $27,650,000 $3,759,785 $18,552,000 $8,766,756 4,263 11,812 $79,064,194 $29.11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 97th Annua! Report ST, JOSEPH LEAD COMPANY TO THE STOCKHOLDERS: c.s. of &.a. iBMeRUBimY CORPORATION | records I DIVISION Lead and Zinc Markets Demand for lead and zinc in the United States de creased during 1960 with the decline in overall eco nomic activity. Lower consumption, coupled with inventory liquidation by consumers, resulted in in creased stocks of both metals in the hands of pro ducers, Although prices were stable throughout most of the year at 13$ for zinc and 12$ for lead, they were sustained at this level only because two of the larger domestic zinc smelters and a large lead pro ducer were closed by long strikes. With the settle ment of these strikes, prices of both lead and zinc were reduced during December by 1$ a pound. The average price of lead in 1960 was 11.948$ a pound, New York, against 12.211$ in 1959. Zinc registered a gain in 1960 of 1%$ per pound to an average of 12.946$, East St Louis basis, as compared with the previous year's 11.448$. This improvement in zinc reflected a strong demand for the metal outside the United States, with consequent lower offerings of foreign metal in this country. Despite continuance for a second year of quotas on metal and ore imports, it became clear during 1960 that with lower rates of consumption, quotas were not restrictive enough to maintain domestic production at present levels of lead and zinc prices. The Tariff Commission recommended to the Presi dent on October 1 that quotas be neither decreased nor removed. At hearings early in the year, held at the request of Congress, the Tariff Commission heard a strong case made by domestic producers for clos ing loopholes in the present quota regulations that allow manufactured items to undermine the quota's effectiveness. Although not all the members of the Commission concurred, a recommendation was made that duties on both lead and zinc be increased and that compensatory increases be made in tariffs on manufactured items. Congress did not act on this recommendation, although bills were introduced embodying the Commission's suggestions. Late in the last session of Congress, a Small Mining Subsidy Bill cleared both Houses but was vetoed by the President. A Small Mining Subsidy Bill has again been sub mitted to the new' Congress. New legislation has also been introduced to increase tariffs on lead and zinc imports, but it is too early to say whether the new Congress and Administration will act favorably. The United Nations Lead and Zinc Study Group met twice during the year to consider measures to establish and maintain a balance in the world's pro duction and consumption of lead and zinc. This or ganization, comprised of representatives of govern ments of 25 major lead-zinc producing or consuming countries, concluded in 1960 that the position of both metals outside the United States was sufficiently strong to warrant no restrictions on world produc tion. However, with excess supplies that exist in the United States and appear to be developing abroad, it is believed that at the forthcoming meeting of this Croup in March at Mexico City, action may be taken to achieve a more favorable balance between supply and demand of lead and zinc. In the long run, we expect consumption of lead and zinc, both here and abroad, to continue to increase under stimulus of population growth and discovery of new applications. Growth abroad may possibly be more rapid owing to more rapidly expanding for eign economies. Although the United States is no longer the principal producer of lead, it is the larg est consumer of both lead and zinc. On balance, it must import a substantial part of its requirements, 5 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. but there exist large latent reserves in the United States that could be brought into production if ade quate protection were provided against foreign com petition. Ten-Year Earnings---1951-1960 Consolidated Year Yet Earnings After Federal Income Taxes of 1951.................. $13,577,237 $13,454,339 Earnings Net earnings for the year 1960 were $2,972,068 and equaled $1.09 per share on 2,717,222 shares out standing in comparison with $6,263,076 or $2.30 per share on 2,716,222 shares outstanding for the year 1959. Lower earnings were due in part to a decline in sales of 13% in lead and 3% in zinc. Also, shaft sinking and development expenses at the Meramec 1952 1953 1954 1955 1956 1957 1958 1959 I960 .................. .................. .................. .................. .................. .................. .................. .................. .................. 9.638,435 6.300.342 7.523.503 12.729.820 10,291,357 8,026,273 3.986,880 6,263,076 2,972,068 5.585,261 4.283,768 4.545,190 6,385,243 5,194.085 3,884,706 699,564 1.518,318 326,930 and Viburnum projects totaled $2,740,632 and were charged to income, an amount $1,022,602 greater than similar charges in 1959. Dividend income from Taxes on Income foreign investments was also 17% lower. The provision for Federal income taxes was $326, Lead sales from Company production declined 930, which is equivalent to $0.12 per share as com from 113,778 tons in 1959 to 98,654 tons in 1960, pared with $1,518,318 or $0.56 per share for 1959. a decrease of 15,124 tons. Sales of zinc content of As indicated in earlier Annual llepoits, the Com metal and oxide showed a 3,598 ton decrease, from ! pany has filed claims for refund of approximately 135,144 tons in 1959 to 131,546 in 1960. $775,000 of Federal income taxes paid for the years A further factor contributing to lower earnings 1919 through 1953, based on the ground that it was was that the tonnages of zinc concentrates, both pur entitled in those years to deductions for percentage chased and mined from the Company's properties, depletion on sales of metal produced from remilled exceeded the tonnage of concentrates used to pro tailings. These claims are not carried on the Com duce the metal sold during the year. In accordance pany's books as assets. The Company's right to such with the Company's long-established accounting deductions is conceded, but the exact amount refund practice, all metal sales are considered to have been able has not been fixed. That amount is subject to made of metal produced from the higher priced pur the final outcome of pending litigation with respect chased concentrates before the lower cost Company to 1949, in which the Company has established in mined concentrates are taken into consideration. the Federal District Court its right to a refund in the This practice, due to the large tonnage of purchased full amount claimed for that year. The Government concentrates, resulted in the gross profit being ap may decide to appeal from this decision. In any proximately $1,250,000 lower. The entire zinc con event, it is expected that the refunds allowed will he centrate inventory at the end of 1960, therefore, is reduced by some $325,000 through the disallowance valued at the lower cost of Company-produced con of other deductions for the years involved, princi centrates. This lower cost basis will be reflected in pally for accelerated amortization of defense facili earnings as inventories are reduced. i ties. However, the full amount of any amortization In 1960 approximately 74% of the gross earnings that is disallowed will in later years be deductible as of the Company came from zinc and 26% from lead, depreciation. compared with 58% and 42% in 1959. Adequate provision has been made on the Com Comparative earnings for each of the last ten years pany's books to cover possible liability for taxes for aie as follows: years subsequent to 1953. 6 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Dividends A dividend of $1.00 per share was paid on the capi tal stock during 1960 consisting of four quarterly payments of $0.25 per share, the same payment as 1959. On February 14, 1961, the Board of Trustees de f clared a dividend of $0.25 per share payable March 10, 1961, to stockholders of record February 24, 1961. The following is a record of cash dividend pay ments for the past ten years on the basis of 2,716,222 shares for the period 1951 through 1959 and 2,717, 222 shares for the year 1960 after giving effect to the stock dividends of 25% paid December 11, 1950, and 10% paid June 10, 1952. Dividends--1951-7960 Year Per Share 1951 . . . . . . 1952 . . . . . . 1953 . . . . . . 1954 . . . . . . 1955 . . . . . . 1956 . . . . . . 1957 . . . . . . 1958 . . . . . . 1959 . . . . . . 1960 . . . . . . $2.95 2.88 2.75 2.00 3.00 3.00 2.00 1.00 1.00 1.00 Amount $8,023,749 7,776,373 7,468,290 5,432,076 8,148,666 8,148,666 5,432,486 2,716,222 2,716,222 2,717,222 Long-Term Debt At December 31, 1960, the long-term debt of the Company was $26,800,000 in comparison with $27, 650,000 as of December 31,1959. Two semi-annual instalments on the 3%% notes of $425,000 each were paid on July 1 and December 31 thereby reduc ing the liability on these notes to $7,225,000 of which the instalment due July 1, 1961, is shown as a cur rent liability and $6,800,000, due after one year, as a long-term debt. Under the Company's Credit Agreement with its banks, the Company has borrowed $7,000,000 at 4% and $13,000,000 at 41/4%> repayable in instalments of $1,428,571 due on January 15 and July 15 of each year commencing January 15, 1962. The Credit Agreement requires the maintenance of not less than $20,000,000 in working capital and prevents the Company from declaring cash dividends which, taken with aggregate dividends paid since December 31,1957, would exceed the sum of 75% of net earn ings since that date, plus $6,000,000. At December 31, 1960 working capital amounted to $37,692,517 and there were $7,766,852 of accumulated earnings free from the prohibition against dividends. Working Capital At December 31,1960 current assets were $45,178, 167 and current liabilities $7,485,650, a 6 to 1 ratio. Net working capital (cash resources and inven tories minus current liabilities) was $37,692,517, a decrease of $4,949,699 from the previous year. A summary of the principal items causing these changes is as follows: Sources of Increase: Net earnings................................. Depreciation and depletion . . . Exercise of stock option................... Total................................. S 2,972,068 3,766,920 30.500 S 6,769,488 Sources of Decrease: Capital expenditures ...... Cash dividends............................ $ 5,802,333 2,717,222 Investments: ' Meramec Mining Company. . . Compania Minerales Santander . Brunswick Mining & Smelting Corp. Ltd.......... 125,000 Reduction in long-term debt . . . Increase in deferred charges, etc. . Total................................. 1,616,994 150,000 850,000 457,638 $11,719,187 Net decrease in working capital during 1960 ................................................ $ 4,949,699 7 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Capital Expenditures Capital expenditures for the last ten years, together with an estimate for the year 1961, are shown in the following table: Year Lead Belt 1951 . . $2,549,327 1952 . . 3,793,396 1953 . . 3,972.871 1954 . . 817,306 1955 . . 458,947 1956 . . 706,272 1957 . . 348,436 1958 . . 437,876 1959 . . 484,128 1960 . . 399,211 1961 (Est.) 1.145.000 Comparative Capital Expenditures ____ Josephiown____ Viburnum Zinc Plant Power Plant Edwards-Balmut ~ -----17.598 119.561 1.780.623 6.754.589 5.051.851 575.000 S 564,768 1,768,048 720,665 208,499 1.769,847 2,171,031 2,185,953 423,990 721,355 188,118 445,000 -- *... ... , -- 633,088 11.803,420 8,796,219 806.68-i $685,128 90.896 94,475 99,938 1,445 6,000 233.000 3.250 -- 81,368 Oil and Gas Leases -- -- S 92,80-1 .. 6,776 -- 239,503 43.752 -- 81,785 -- Total $ 3,799,223 5.652,340 4,880,815 1,125,743 2,237,015 3,533,984 14,929,873 11,485,710 8,766,756 5,802,333 2,165,000 Southeast Missouri The mines and mills of the Lead Belt operated on a five-day week basis without interruption throughout the year. Ore milled during 1960 totaled 5,635,423 tons as compared with 5,290,638 tons in 1959 when the properties operated on a four-day week basis for the period February 16 to August 6, and on a five-day basis the rest of the time. The pig lead and slab zinc equivalent of concen trates produced were 103,875 tons and 2,963 tons respectively as compared with 100,289 tons and 97 tons for the year 1959. On a two-furnace operation throughout the year, the Herculaneum smelter pro duced 98,447 tons of pig lead in comparison with 91,742 for the year 1959. Slab zinc produced from blast furnace slag was 2,056 tons for the year. District 50 of the United Mine Workers of Amer ica attempted to replace our current union, the Qil, Chemical and Atomic Workers International Union AFL-CIO, but were defeated in a run-off election held on January 20, 1961. Employee relations re mained harmonious throughout the year. Edwards-Balmat, New York This division produced 123,160 tons of zinc con centrates and 1,221 tons of lead concentrates during 8 1960 as compared with 81,086 tons of zinc concen trates and 789 tons of lead concentrates in 1959 when the entire property was closed down for the period July 1 to November 2 on account of a strike. As in previous years, all zinc concentrates pro duced at this division were shipped to the Company's Josephtown smelter and the lead concentrates to the Company's Herculaneum smelter, Josephtown, Pennsylvania The Josephtown smelter operated on a basis of 48 hours per week during the entire year. On January 1, 1961 the work week was reduced to 44 hours, and on March 1, 1961 a further reduction to 40 hours per week was made. The effect of these reductions was to curtail zinc production from approximately 12,000 tons per month to 9,000 tons per month. The zinc content of the metal production for the smelter was 146,732 tons for the year as compared with 128,670 tons for 1959. With a Special High Grade zinc refining column that was put into operation in 1959, the Company is able to produce all grades of zinc. Mine La Matte Corporation This corporation, which is a 50% owned affiliate, owns a lead mine in Madison County, Missouri. Due Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. to depressed conditions in the lead market, this prop erty was placed on a standby basis in February 1959. There are no immediate plans to place the mine in production. EMPLOYEE RELATIONS Employment and Payrolls At the end of 1960 the Company and its subsidiaries employed 4,171 men and women compared with 4,263 at the end of 1959. Of this number 15% of our employees had over 25 years of service and 62% have been employed between 10 and 25 years. Direct salaries and wages paid during the year amounted to $24,803,687 which is 9.4% more than the total of $22,670,522 reported for 1959. The principal rea son for the increase was that in 1959 the Lead Belt worked four days a week for the period February 16 to August 6, and the Edwards-Balmat operations were closed down by a strike from July 1 to Novem ber 2, 1959. Pension Program This program consists of two non-contributory Plans, a Retirement Plan for Salaried Employees and a Pen sion Plan for Payroll Employees. A total of 2,884 employees are covered by these Plans. In 1960 the Company contributed $1,049,557 to The Pension Trust Fund of the Plans and this amount was charged against current earnings, with retired employees re ceiving payments of $355,782. At the end of the year, 819 former employees were receiving pensions as compared with 822 at the end of 1959. The cost of past service under both Plans has been entirely funded through contributions to the Fund. Deferred Profit Sharing Plan Under the Deferred Profit Sharing Plan for Salaried Employees which was established as of January 1, 1956, contributions by the Company are 3% of the consolidated net earnings or 10% of the aggregate salaries of the eligible employees, whichever is less. However, no contribution can be made which would result in the consolidated net earnings after such con tribution being less than $2.00 per share. As the Company's consolidated earnings were less than $2.00 per share in 1960, no contribution was made. Stock Option Incentive Plan Under a stock option incentive plan approved by stockholders in 1958, 130,000 shares of the Com pany's unissued capital stock were reserved for issu ance 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 such options were granted. Outstanding options at December 31, 1960 were as follows: Date of Grant Number of Shares September 24. 195(1 . , . . 34.500 September 22. 1959 . . . . 9.700 Total .... . . 44,200 Option Price $30.50 30.50 The options may be exercised in equal annual in stalments on the anniversary date of each grant. Any part of an option unexercised at the end of five years from date of the grant becomes void. During 1960 no additional options were granted; one for 1,000 shares was exercised and 84,800 shares remained available for future grants. PROGRESS IN NEW AREAS Viburnum Lead Project Further expansion of the ore reserves in the Vi burnum area of Washington, Crawford and Iron Counties, Missouri, continued during 1960. Shaft No. 27 and the first 3,000-ton unit of the 6,000-ton mill were completed and the property brought into production on July 15. Since then and until the end of the year, 228,759 tons of ore were milled. Present plans call for the completion of the work on the No. 28 Shaft to bring it into production during 1961. However, the sinking of No, 29 Shaft and the instal lation of the second 3,000-ton unit in the mill have been postponed pending improvement in the general business outlook. Expenditures in this area for 1960 amounted to $6,554,260 of which $5,051,851 was capitalized and $1,502,409 of shaft sinking and development ex pense written off against current income. 9 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. It is estimated that $880,000 will be expended on this property during 1961 of which $575,000 will be capitalized and $305,000 charged against income. Meramec Mining Company Good progress was made during the year by Meramec Mining Company owned jointly (50% each) by Bethlehem Steel and St. Joe, on the Pea Ridge iron project located about 40 miles northwest of Bonne Terre, Missouri. At the end of the year the service shaft of the mine (Shaft No. 1) and the main hoisting shaft (Shaft No. 2) had reached depths of 2,274 feet and 1,882 feet, respectively. The warehouse, machine shops and office build ing have been completed and are now in use. The Missouri Pacific Railroad spur running from Cadet, Missouri to the mine and plant site, a distance of about 26 miles, has also been completed enabling incoming freight to be brought by rail. During 1960 Bethlehem and St. Joe each advanced a total of $2,774,637 of which $1,616,994 was set up by St. Joe as an additional investment in Mera mec Mining Company and $1,157,643 of shaft sink ing and development expenses, together with $80,580 of deferred charges, were written off against current earnings. In 1961, construction of permanent buildings will continue, as well as shaft sinking and development of the underground ore bodies. Under this pro gram it is estimated that the 1961 expenditures will approximate $9,600,000 ($4,800,000 each by Beth lehem and St. Joe) and of this amount St. Joe will charge approximately $3,458,000 to its investment account in Meramec and $1,342,000 against current earnings as a development expense. Under our agreement with Bethlehem, St, Joe can borrow on its 4Vs % Notes, 80% of its 50% share of the expenditures on the project. To date no funds have been borrowed. OIL LEASES Crockett County, Texas Principally because of the more stringent proration 10 which was put into effect by the Texas Railroad Com mission allowing 104 days of production in 1960 as compared with 123 days in 1959, the income from royalties from our joint venture with Continental Oil Company in the Harris Ranch Leases was $336,812 compared with $432,169 in 1959. It is estimated that our share of the recoverable reserves as of December 31, 1960 were 1,758,878 bbls. of oil and 12,587 million cubic feet of gas in comparison with 1,962,404 bbls. of oil and 15,166 million cubic feet of gas as of December 31, 1959. NORTH AFRICA St. Joe owns 17.15% of both Societe Nord Africaine du Plomb (NAP) and Societe Algerienne du Zinc (ALZI) which have mining operations near the Algerian-Moroccan border. The mines operated with out interruption throughout the year and produced 124,187 metric tons of ore in comparison with 99,538 metric tons in 1959. CANADA Brunswick Mining and Smelting Corporation Limited Brunswick (40% owned) suspended operations April 1, 1958 and has remained on a stand-by basis throughout the year. Expenditures during 1960 amounted to $113,974. To cover the cash required, St. Joe advanced $125,000 to Brunswick on its 5% income bonds due in 1970, this brings the total ad vanced to December 31, 1960, to $6,210,000. An agreement between the Corporation and Sogemines Limited to bring the Brunswick proper ties into production at a rate of 2,000 tons of ore per day, has not been signed by Brunswick. The Corpo ration is currently studying the feasibility of oper ating a smelter in the Province of New Brunswick. SOUTH AMERICAN OPERATIONS Argentina Cia. Mineha Aguilar, S.A. (99.9% owned) oper ates a lead-zinc-silver mine in the Province of Jujuy, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Argentina. The net earning* for the year 1960 were 156,027,400 pesos compared with 165,093.683 pesos for 1959. The equivalent dollar value of these earn ings computed at the free rate of exchange as of De cember 31. 1960. were S 1.882,000 and $1,990,000 icspectively. While sales of lead and zinc concentrates de creased in Argentina dusing the year, by exporting concentiates and sinter to the European markets, Aguilar earnings were maintained near the 1959 level. The property operated without interruption throughout the ycai, producing 52.298 metric tons of zinc concentrates and 24,590 metric tons of lead concentiates in comparison with 60,291 metric Ions and 28,483 metric tons respectively, in 1959. The austerity program in Argentina has succeeded in maintaining a stable value of the peso in 1960 and has held back the increase in cost of living to around 15%, hut the problems of excessive govern ment expenditures and rehabilitation of the railroads remain to he solved. Provided the present degree of economic and political stability can be maintained, the outlook will continue hopeful. Sui.facii, S.A. (50% owned affiliate of Aguilar) operates a sulphuric acid plant at Rosario, Argen tina. Sale* of sulphuric acid were 30,262 metric tons in I960 compared with 30,912 metric tons in 1959. Net earnings for the year 1960 were approxi mately 31,300,000 pesos compared with 27.125,589 pesos for the year 1959. NTo dividends were declared because of the necessity to conserve cash in order to finance the new 18-ton per day electrolytic zinc plant. Uia. Metai.ijrdiea A t sth a i .A ri; e n ti n a, S.A. I 13.3% owned affiliate of Aguilar) operates a zinc smelter at Comodoro Rivadavia. Argentina. Sales were 6.381 metric tons of slab zinc in 1960 as com pared with 6.973 metric tons in J959. Because of a decline in industrial activity in Argentina, sales of zinc were adversely affected with the result that net earnings for the year 1960 were about 11,000.000 pesos as compaied with 20,136.915 pesos in 1959. Peru Cia. Minerai.es Santander, Inc. (68.04% owned) in which St. Joe has a $2,285,000 invest ment, operates a lead-zinc open pit mine in the Peru vian Andes. During the year 5.067 short dry tons of lead concentrates and 32,720 short dry tons of zinc concentrates were produced and sold in the U. S., Europe and Japan. Similar production for the year 1959 was 5.864- and 21,865 short dry tons respectively. The company showed a net profit of $149,519 in 1960 after writing off $122,649 of de velopment expenses, in comparison with a net profit of $244,936 for the year 1959 after a write off of development expenses of $80,091. Toward the end of the year it was decided to in crease production approximately 12%% to provide greatei efficiency. It was also decided to increase the rate of stripping waste, speed up completion of the camp and provide adequate working capital. Neces sary funds arc being furnished through an agreement under which St. Joe will purchase up to $500,000 of Santander's debentures and common stock. ANTI-TRUST SUIT As stated in the Report for the First Quarter of 1960, the United States District Court found on April 7, 1960, that the Bunker Hill-St. Joe contract, covering sdes of Bunker Hill lead on a commission basis, wa* in violation of Section 1 of the Sherman Antitrust Act. On July 11, 1960, the Court entered a Final Judgment, effective December 31, 1960, ordering St. Joe and Bunker Hill to cancel the contract. In addition to certain injunctive provisions normally included in antitrust judgments under Section 1, the Judgment also prohibited St. Joe from selling pri mary lead produced by Bunker Hill or any other per son engaged in the United States in the production or sale of primary lead, other than such lead pro duced for Si, Joe under toll contracts or purchased by St. Joe from other producers under certain limited circumstances. No appeal was taken from this Judgment by Bunker Hill or by St. Joe. Pursuant to this Judgment, the lead sales contract with Bunker Hill was terminated effective Decembei 31, I960. Bunker Hill terminated at the same time. its contract with St. Joe under which St. Joe had sold Bunker Hill zinc. 11 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ANNUAL MEETING The 1961 Annual Meeting of the Stockholders will be held Monday, May 8, 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 7th. ORGANIZATION CHANGES Since the announcements in the last Annual Report, the following changes have been made in the Board of Trustees and Officers of the Company. Mr. C. Merrill Chapin, Jr., after 37 years of con tinuous service with the Company, retired as of No vember 1, 1960 as Vice President and member of the Executive Committee. Mr. Chapin continues as a member of the Board of Trustees, At a meeting of the Board of Trustees on February 14, 1961 the resignation of Mr. H. DeWilt Smith as a member of the Board and of the Executive Com mittee was accepted with profound regret. Mr. Smith had served as a member of the board since February 1948 and is retiring because of ill-health. At the same meeting, Mr. Plato MalozemofT, President of Newmont Mining Corporation, was elected a Trus tee to fill the vacancy caused by the resignation of Mr. Smith. At the same meeting, Mr. George I. Brigden and Mr. Eli Whitney Debevoise were elected members of the Executive Committee. At the meeting of the Board of Trustees held March 14. 1961, the resignation of Mr. Arthur M. Anderson was accepted with profound regret. Mr. Anderson had served as a member of the Board since August 1944 and, like Mr. Smith, is retiring because of ill health. At the same meeting, Mr. Guido F. Verbeck, Jr.. Senior Vice President, Morgan Guar anty Trust Company of New York, was elected a Trustee to fill the vacancy caused by Mr. Anderson's resignation. Annual Report to Employees A copy of the Annual Report to Employees for the year 1960 will be found under the flap of the rear cover of this report. The photographs and addition al operating comments may be of interest to stock holders. Stockholders At December 31, 1960 there were 10,651 registered stockholders compared with 11,812 the previous year. A classification of stockholders at the end of 1960 is as follows: Men................................................... Women.............................. ..... Joint Accounts............................... Fiducial ies.................................... Insurance Companies..................... Brokers & Security Dealeis . . . Nominees......................................... Institutions and Others.................... Stockholders ..... .................... .................... ..... .................... .................... .................... .................... 3.924 1.011 1.690 515 35 197 241 238 10.651 Percent 34.96 37.66 15,87 4.84 .33 1.85 2.26 2.23 100.00 Shares Held 496.517 391,329 128,815 298,633 106,209 146,536 618.820 230.363 2.717.222 Percent 18.28 14.40 4.74 10.99 3.91 16.43 22.77 8.48 100.00 Conclusion We express our sincere thankf and appreciation to ail employees for their loyal and diligent efforts dur- in" the nnsl vear and to our stockholders for their continued support. New York, March 17, 1961 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UNITED STATES LEAD AND ZINC STATISTICS LEAD (In Short Tons) 1960 (Est.) Available Supply: U. S. Mine Production . From scrap............................. Imports of concentrates and bullion ( Lead content) .... Metal imports (net) .................................................................. Total LeadMetal Available.......................................... 244,000 440,000 146,000 208,000 1,038,000 Consumption: Batteries...................................................................................... Ethyl gasoline............................................................................ Cables...................................................................................... Construction........................................ Pigments.................................................. Other uses.................................................. TotalConsumption .................................................... Surplus or (deficit)................................... 347,000 161,000 60,000 116,000 98,000 241,000 1.026.000 12.000 1959 (Final) 256.000 418.000 139.000 269.000 1*082^000 381.000 160.000 62,000 135.000 104.000 219.000 1,091,000 (94)001 ZINC (In Short Tons) Available Supply: Recoverable U. S. Mine Production ......... Less--used to make pigments . . . . . .......................... Recoverable domestic zinc available to Metal Smelters . . . Scrap zinc......... .......................................... Imports of concentrates( Recoverable zinc content) .... Imports of slab zinc................................... Total Zinc Metal Available.......................................... Consumption: Galvanizing................................................................................. Zinc Base Alloys....................................................................... Brass............................................................ Rolled Zinc............................................. Oxides...................................................................................... Other ............................................................................................ Total Consumption................................................... Exports...................................................................................... Total Zinc MetalConsumed and Exported .... Surplus........................................................................................... 432,000 83.000 349,000 48.000 450.000 121,000 968.000 355.000 321.000 97.000 36,000 16,000 _ 36.000 861,000 75.000 936,000 32.000 425.000 _ 108.000 317.000 58,000 499.000 157.000 *1,031,000 361.000 389.000 129.000 43.000 18.000 16,000 956.000 12,000 968.000 63,000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST, JOSEPH LEAD COMPANY -- LEAD AND ZINC STATISTICS Year 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 Lead Concentrates Produced from Company's Mines 158,579 .................................. 157,037 160,625 164,171 162,552 158,861 163,079 .................................. 149,624 143,167 147,879 Lead Concentrates Purchased 27,792 39,726 38,294 39.373 43,100 14,353 46,309 25,102 8,300 13,656 Pig Lead Equivalent of Produced and Purchased Concentrates 121,431 128,141 129,281 133,932 136,668 136,921 140,617 119,489 106,678 114,328 LEAD (In Short Tons) Pig Lead Production 112,754 128,691 130,430 129,766 138,796 137.429 137,940 116,799 101,478 98,447 Pig Lead Sales Including Sales Under Agency Contract* 147,905 160,625 167,192 183,079 212,100 199,294 183,942 139,131 164,084 131,852 ZINC (/ Short Tons) Zinc Concentrates Produced from Company's Year Mines 1951 . . . . 82,217 1952 , . . . 69,173 1953 . . . . 104,744 1954 . . . . 109,547 1955 . . . . 109,303 1956 . . . . 114.138 1957 . . . . 123,417 1958 . . . . 99,523 1959 . . . . 81,292 1960 . . . . 128,762 Zinc Concentrates Purchased 47,659 103,769 112,991 61,610 111,868 126,164 105,604 84,987 104,493 134,773 Slab Zinc Equivalent of Produced and Purchased Concentrates 71,077 98,680 126,968 , 105,610 134,012 146.897 144,011 120,515 121,138 173,016 Slab Zinc Equivalent Smelter Production 99,602 108,959 121,592 111,021 138,201 136,879 151.554 122,774 128,670 148,788 Zinc Sales Including Sales Under Agency Contracts 143,587 134,942 152,522 167.512 202,515 181.321 192.112 174.083 179,478 158,276 Sulphuric Acid Sales 156,861 162,712 174,715 147,076 183,609 190,001 204,255 171,938 176,607 186,722 14 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Net Sales of Metals, Metal Products, Etc.......................... ..... ............................................. Cost of Sales, Etc................................................. ..... ................................................................... Other Income: Dividends: From foreign investments . .............................................................. From domestic investments....................................... Interest from investments.................................................................... Income from oil royalties................................................... ..... . ............................ Other income less charges................................................................................................. Total................................................................................................ . . .................................. Deduct: Selling, general and administrative expenses . . ........................................ ..... Shaft sinking and development expenses Merarnec and Viburnum Projects............................................ Oil development and operating expenses.................................................................... Other exploration and development expenses ......................................................... Past service annuities (Note 5).................................................................................... Depreciation . ................................................................................................................. Depletion........................................ Interest on indebtedness................................................................................................. Total deductions................................................................................................. Earnings llcfore Federal Income Taxes......................................................................... Provision for Federal Income Taxes................................. Net Earnings for the Year (1960. $1.09 per share; 1959. $2.30 per share) ... Retained Earnings at Beginning of the Year.................................................................... Cash Dividends Paid During the Year ($1 per share) . . Retained Earnings at End of the Year (Note 7) . . . . . ............................ ............................ See notes. So financial statement',. 1960 $79,634,096 68,985,713 $10,648,383 1,750,080 241,750 546,318 336,812 5,269 $13,528,612 $ 2,142,523 2,740,632 76,789 140,197 190,511 3,647.485 119,435 1.172,042 $10,229,614 $ 3.298,998 326,930 $ 2.972,068 33,745,478 $36,717,546 2,717,222 $34,000,324 1959 $86,179,208 72,967.543 $13,211,665 2,104.014 172,850 594.295 432,469 137,901 $16,653,194 $ 2,114,233 1,718,030 153,021 132,521 265,040 3,200,352 134,296 1.154,307 $~8,871,800 $ 7,781,394 1.518,318 $ 6,263,076 30,198,624 $36,461,700 2,716,222 $33.745.478 15 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ASSETS Current Assets: Cash . . .............................................................................. U. S. Government, State, and Municipal short-term securities...................... ..... Accounts receivable--trade............................................. 0. S. Government--claims for income lav refunds. . Other accounts receivable.................................. Inventories (valuation not in excess of market) -- (Note 1): Finished lead, zinc, etc...................................................... Lead, zinc, etc., in process and concent rules . . . Materials ami supplies................................................... December 31, I960 $ 4.047,224 9,545,000 4,836,888 480,201 353,672 10,927.952 9,172,403 __5.814.827 $ 45,178,167 Investments: Cornpania Minera Aguilar, S, A. (at nominal valua tion--99.9% owned, not consolidated)--11 Note 2) Mine La Mottc Corporation (at nominal valuation - 50% owned)--(Note 3).............................* . The New Jersey Zinc Company (at cost, less, non-tax* able dividends, 100.090 sha'-. s--5.1% owned) . . Brunswick Mining and Smelting Corporation Limiled (at cost) -- (Notes 6 and 7): 1,600,000 shares--40% owned ........ 5% income bonds, due July 1,1970 . .... Cornpania Mincrales Santander. Inc.--Investments and advances (at cost--68.04% owned)-- (Note 3) Meramec Mining Company--Investments and ad- vanoes (at cost--50% owned) --(Note 7) ... Sundry securities, loans, etc.- -including advances to affiliates (at cost, less reserve, $200,000) .... '-$> 1 :1 5.724.028 2.339.758 6.210.000 2,285,000 2.884,512 780,036 20.223.336 Capital Assets (Noted): Mining properties and mineral rights (at March 1,1913 appraised value plus subsequent additions at cost) Less allowance for depletion........................................ Land, buildings, plant and equipment (at cost). . Power plant (at cost).................................. i . . . Total................................................... ..... Less allowance for depreciation.................................. Total capital assets, net........................................ Miscellaneous Assets: U. S, Government. State, and Municipal securities on deposit with State departments (at amortized cost) Cash and marketable securities (at amortized cost)-- Fire insurance fund (see contra) . . . . . . . $40,849,816 $66,145,786 22,039.411 44.117,067 $ 965,338 283,068 3,475,774 ~3 44,068,130 $ 47,543.904 1,248,406 Deferred Charges: Deferred exploration expenses.................................. ..... Deferred past service annuities (Note 5) ..... Oil and natural gas expenditures in suspense .... Other deferred charges........................................................ - $ 1,255.567 767,901 120.635 207,960 2,352,063 Total................................. ....................................... $116,545,876 See notes to financial statements. 16 December 31,1959 $ 3,759,785 18,552,000 6.783,939 480,201 394,223 8,906,894 5.089,362 6.132.579 $ 50,098,983 S1 1 5,724.028 2,339,758 6,085,000 2.135,000 1.267,518 ___841.590 18.392,896 $40,211,170 37.254.607 $61,490,474 22,039,411 $83,529,885 40.860.365 2,956,563 42,669,520 $ 45,626.083 $ 965,720 275,881 1,241,601 $ 892,491 958,412 120,635 218,637 2,190,175 $117,549,738 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UABiliTiES December 31, I960 Current Liabilities: Accounts payable....................................................................... $ 4,891,42] Wages accrued............................................................................. 384,625 Long-term debt due within one seal . ... .. 425,000 Accrued taxe^: Federal income (Note 7) . . ..... 1,494.304 Other......................................................................................... ................290300 $ 7.485,650 Long-Term Debt (Note 7): 3%% notes due in instalments of $425,000 on Janu ary 1 and July 1....................................................................... Notes payable to banks due in semi-annual instalments of $1,428,571 commencing Januarv 15. 1962 ($7,000,000 at 4% and $13,000,000 at 4*4< ) . . $ 6,800,000 20.000.000 26.800.000 Deferred Federal Income Taxes- jelated to accelerated amortization and depreciation.............................. Reserves: Injury claims and workmen's liability insurance . . Employees' life insurance and retirements .... Fire insurance (see contra)..................... .... $ 605,560 391,256 283,068 1.630.802 1,279,881 Stockholders' Equity (Note 7): Capital Stock, par value $10 per share: Authorized 5,000,000 shares Outstanding--1960, 2,717,222.5 shares; 1959, 2,716,222.5 shares (after deducting 21.414.35 shares held in treasury)................................... Other Capital--representing principally excess of amount of stock dividends over par value of capital stock......................................................................................... Retained Earnings................................................................. Total Stockholders' Equity.............................. 27,172,225 , 18,176,991 34,000,324 $ 79,349,540 December 31, 1959 $ 5,616,907 341,323 425.000 841,434 232,103 $ 7.456,767 $ 7,650,000 ,20 000,000 27,650.000 S 586,813 409,573 275,881 2,106,510 1,272,267 27.162,225 18,156,491 33,745,478 $ 79,064,194 Total . $116,545,876 Sec notes to financial statements. $117,549,738 17 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ST. JOSEPH LEAD COMPANY AND CONSOLIDATED SUBSIDIARIES Notes to financial statements 1. Inventories of lead, zinc, etc. (finished, in process, and concentrates) are valued at cost, determined substantially on last-in, first-out (LIFO) method. Materials and supplies are valued at average cost. 2. It is the practice of the Company to record dividends received or receivable from Compania Minera Agui lar, S. A. as they are converted into U. S. dollars. Financial statements of Compania Minera Aguilar. S. A., are included herein on pages 20-22. 3. The Company's equity in the net assets of Mine La Motte Corporation at December 31,1960, was $213, 759 and in its net earnings for the year then ended $136. The Company's equity in the net assets of Compania Minerales Santander, Inc., and advances to that company at December 31, 1960 totalled $2,553,387 and the equity in its net earnings for the year then ended was $101,733. 4. The net value of the capital assets as shown in the consolidated balance sheet does not indicate the present value of the companies' properly, plant and equipment, as such value could be arrived at only by current estimates which would vary from time to time depending on the price of metals, rale of pro duction, cost of labor, and other factors. Mining properties and mineral rights include $17,- 000,000. which has been fully depleted, represent ing March 1. 1913 appraised values. 5. The Company and its domestic subsidiaries have a Retirement Plan for Salaried Employees and a Pen sion Plan for Payroll Employees, covered either by a contract with an insurance company or by funds deposited with a Trustee, no part of which is reflected in the accompanying consolidated balance sheet. Both plans are non-contributory and all past service costs have been funded. The deferred past service cost is being amortized over a 10-year period. Cur rent annual costs of both the Retirement Plan and Pension Plan aggregated $1.019.557 and $780,000 in 1960 and 1959. respectively. 6. The Company has a commitment to loan Brunswick Mining and Smelting Corporation, a 40% owned company, up to $7,500,000 (Canadian funds) as needed for development and equipment. Under this commitment $6,210,000 had been loaned at Decem ber 31,1960 in exchange for an equal amount of 5% Income Bonds of Brunswick. The loan may he sub ordinated to other indebtedness of Biunswick not to exceed $17,500,000 (Canadian funds). 7. Reference is made to the text of this report relative to the companies' taxes on income, long-term debt, stock option incentive plan, Viburnum lead project. Meramec Mining Company, Brunswick Mining and Smelting Corporation Limited, and anti-trust suit. 18 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS a SELLS CERTIFIED PUBLIC ACCOUNTANTS TWO BROADWAY NEW YORK 4 ACCOUNTANTS' REPORT To the Stockholders of St* Joseph Lead Company: We have examined the consolidated balance sheet of St. Joseph Lead Compan\ and its consolidated subsidiaries as of December 31, 1960 and the related >talement of consolidated earnings for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying consolidated balance sheet and statement of consolidated earnings, with the notes to financial statements, present fairly the financial position of St. Joseph Lead Company and its consolidated subsidiaries at December 31, 1960 and the results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent w ith that of the preceding year. HASKINS & SELLS / I'ehi uary 28, 1961 , i' : ; : 19 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. /-;.: v COMiPpAaaMhAa''MmIiNaiEpRpAarAA-eGsUiImLMji*Ro^r*' $;;; A .-/V ^iV -/< r'*` . :r.v BALANCE SHEET December 31, I960 and 1959 ASSETS December 31,1960 Argentine paper pesos (Note 1) December 31,1959 Argentine paper pesos (Note I) Cash............................................................... ..... Mai ketable '-ecurilw*: Argentine Government (at co-t).................................. Other (at cost. les* reserve--1960 and 1959. 19,493.471)..................................................................... Accounts receivable--11ade (les- u>eiu;- * I960, 5.604.573; 1959, 7.037.000)............................. ..... . Due ft uni paitly-owned company- tiadc....................... Other accounts receivable, etc.............................................. Inventories (Notes 3 and 4) : Lead and zinc concent!ate*.............................................. Material-* and supplier.................................................... Investments (Note 5) : Sulfacid. S. A. Indnsti ia) (at cost----50% owned J . . Compania Metalurgica Au-U al-Argentinu. S. A. Comercial (at cost--43.3% owned J.................................. Capital Assets (Note* 2 and 4): Mining properties and mineral rights: C-t. including exploration and development prior to the commencement of operations....................... Less allowance for depletion . ............................. Appreciation arising from valuation in 1936 and revaluation in 1960.............................................. Less allowance for depletion................................... Total mining properties and mineral rights, net Land, buildings, plant and equipment: Cost...................................................................................... Less allowance for depicciation............................. Appreciation arising from revaluation in 1960 . . Less allowance for depreciation....................... ..... Total land, buildings, plant and equipment, net Total capital assets, net. ................................... 29.155.497 4.000.000 55.755.276 74.387,523 9.411,596 199.097,858 20.428.902 8.746.356 4.401.217 3.803 619 101,936,190 43,356.416 209,124,684 58,350.687 341,248,636 28.600,408 638.693.890 29.175.258 597..: 93 58,579,774 59,177,372 150,773,997 312,648,228 463,422,225 522,599,597 75,895.726 14.000.000 114.162,878 57,551,570 23.257,664 7.210.476 185.558,755 133.285.157 610.922,226 20.428.902 8.746.356 29,175,258 4,401,217 3,502,941 49,446,117 39,700,779 898,276 9,745,338 10,643,614 185,764,252 56,846,283 -- -- 128,917,969 _ 128,917,969 139,561,583 Deferred Charges..................................................................... Total........................................................................... 7,454,807 1,197,923,552 6,515,966 786,175,033 Notes: U) Tlie quoted free rate of exchange for a peso was approximately 1.2 cents at December 31, I960 and at December 31, 1959. (2) As of January 1, 1960 capital assets were subject to a revaluation as permitted by Argentine Law No. 15,272. The total appreciation of pesos 393,738,090 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 to be stated at less than present values. Following the principle of Law No. 15,272, depletion of the original cost and of the 1936 valuation of mining properties and mineral rights, discontinued since 1950, has been recommenced. Depletion and depreciation of the amounts of 1936 and 1960 appreci ation on revaluation charged against earnings in 1960 totaled pesos 32,256,045. Application of the foregoing for tax purposes has resulted in a reduction of 1959 and 1960 income and extraordinary profits taxes of pesos 36,927,138, credited against the total of such taxes shown in the 1960 statement of earnings. Following the practice of prior years, a special appropriation of pesos *16,679,556 for replacement of capital assets has been made 20 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LIABILITIES Current Liabilities: Accounts pavable--trade....................... .... Due to St. Joseph Lead Company....................... Due to partly-owned company . ................................. Wage" accrued. ........................................................ Accrued Argentine income anti other taxes . . . . Other accounts pavable..................................... .... . December 31,1960 Argentine paper pesos (Note l) 6.476.015 5,032,782 40.839,327 6,232.366 18,164,261 6.223.963 82.968,714 December 31,1959 Argentine paper pesos (Note 1) 5,772,132 4.724,585 23,558,999 6,078,064 92,667,509 5.477,784 138.279.073 Advance from St. Joseph Lead Company....................... Deferred Credits--Unearned interest, etc...................... 10,386,498 1,188,512 13,505,116 140.198 Reserves: Replacement of capital assets (Note 2) . . . . . Employees' compensation under Argentine social laws Accidents................................................................. Other .......................................................................... 317,217,498 22.153,315 28.760.840 28.412.717 396.544.370 270,537,942 19,844,743 20.817,511 21,705.481 332.905,677 Stockholders' Equity: Capital Stock--Nominal value of 80 Argentine paper pesos each: Authorized 2,500,000 shares Issued--1960, 2,375,000 shares; 1959.1,375.000 shares ................................................................. Other Capital (Note 2): Arising from 1936 valuation of mining properties and mineral rights (remainder after transfer of pesos 48,000.000 to stated value of capital stock) Arising from 1960 revaluation of capital assets . . 1,446,736 393,738.090 190.000,000 395.184.826 110,000,000 1,446,736 -- 1.446,736 Retained earnings: Appropriated for statutory reserve....................... Unappropriated................................................... Total Stockholders' Equity....................... Total................................................... .... , 11,000,000 110.650.632 121.650.632 706,835,458 1,197,923.552 8,293,926 181,604.307 189,898.233 301,344.969 786.175.033 Notes Continued: ; out of earnings for the year 1960. Similar special appropriations were made out of earnings in the preceding nine years aggregating pesos 253,119,600. (3) In 1960 the basis for costing substantially all inventoiies was changed from average cost to last-in, first-out (LIFO), such a change being permitted by modifications in the Argentine tax laws. Inventory reductions caused by this change amounted to pesos 95,210,198 and have been charged against cost of sales in 1960. (4) The revaluation of capital assets in terms of Argentine Law No. 15,272 and the change in the basis of costing inventories described in Notes (2) and (3) above have had the effect of reducing the net earnings for the year by approximately pesos 40,300,000, after taking into account the net decrease in 1960 taxes and the recovery of 1959 taxes brought about by the application of that Law. (5) Reference is made to page 11 of this report relative to operations of the Company's two affiliates, Sulfacid, S.A. Industrial and Compania Metalurgica Austral-Argentina, S.A. Comereial. (6) In accordance with standard practice in Argentina, "lock dividends received have been credited to earnings at par. Amounts so credited during the years ended December 31, I960 and 1959 totaled approximately pesos 17,800,000 and 12,800,000 respectively. 21 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPANIA MINERA AGUILAR, S. 4. Statement of Ear nmcjs For the Years Ended December 37,1960 and 1959 Net Safes of Lead and Zinc Concentrates. Etc, Cost Thereof (Note 3) ............................. Other Income; Dividends (Note 6)........................................ ............................................................... Profit from sale of marketable secnritic- ..................................................................... Interest.................................................................................................................................... Other, less charges.............................................................................................................. Total.................................. ..... ......................................................... ............................................. Deduct: Selling, general and administrative expenses .......................................................... Taxes, other than taxes on income............................. ................................................... Depreciation and depletion (Note 2) .................................. . ............................. Total Deductions ............................................................................................ Earnings Before Tuxes on Income and Special Appropriation............................. Provision for Argentine Income and Extraordinary Profits Taxes, Net (Note 2) Earnings before Special Appropriation................................................................................ Special Appropriation for Replacement of Capital Assets (Note 2)....................... Net Earnings for the Year (after special appropriation) (Note 4)....................... See note*, on accompanying balance sheet. I960 Argentine paper pesos (Note 1) 594.265.789 325.160.898 269.101891 20,916,057 25,056,919 2,917,069 5.511.646 323,506,582 21,987,274 30,464,216 34.841.170 87.292.660 236.213.922 32.706.966 203,506.956 46.679,556 156,827.400 1959 Argentine paper pesos (Note 1) 472,726.446 113.805,136 358.921,310 15,141,489 4,557,002 482,993 2.773,527 381,876,321 19,671,685 6,246,191 13,701,994 39.619,870 342,256,451 111,116,568 231,139,883 65,246,200 165,893,683 Statement of Unappropriated Retained Earnings For the Years Ended December 31,7 960 and 1959 Unappropriated Retained Earnings at Beginning of the Year .... . . . Add--Net Earnings for the year (after .special appropriation) . ... . . . Total............................. : ..................................................... . . Deduct: Dividends paid during the year: Cash................................................................................. ... Capital stock............................................................................................. . . . Appropriation for statutory reserve.......................................................... . . . Total Deductions........................................................................... . . . Unappropriated Retained Earnings at End of the Year ........ . . See notes on m company mg balance sheet. 22 1960 Argentine paper pesos (Note I) 181.604,307 156.827,400 338.431.707 145,075,000 80,000,000 2.706,075 227.781,075 110.650,632 1959 Argentine paper pesos (Note 1) 93,196,597 165,893,683 259,090,280 75.625,000 -- 1,860,973 77.485,973 181,604,307 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. HASKINS 8t SELLS CERTIFIED PUBLIC ACCOUNTANTS TWO BROADWAY NEW YORK 4 ACCOUNTANTS' REPORT St. Joseph Lead Company; . We have examined the balance sheet of Compania Miners Aguilar, S. A. (incorporated and doing business in Argentina) as of December 31, 1960 and the related statements of earnings 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 accounting records and such other auditing procedures as we considered necessary in the circumstances. During the year 1960 a special appropriation of 46,679,556 Argentine paper pesos for replacement of capital assets was made out of net earnings for the year. Similar special appropriations were made annually out of earnings in the preceding nine years, aggregating 253,119,600 Argentine paper pesos. In our opinion, accepted accounting principles require that such appropriations be set aside not out of earnings for the year but out of retained earnings. In our opinion, except as described in the preceding paragraph the accom panying balance sheet with the footnotes thereon, and statements of earnings and unappropriated retained earnings present fairly the financial position of Compania Minera Aguilar, S, A. at December 31, 1960 and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in Argentina and applied (except for the changes in the methods of accounting for capital assets and for inventories explained in Notes 2, 3 and 4 to the Balance Sheet) on a basis consistent with that of the preceding year. The accounting for capital assets and related depletion and depreciation (including the charges to earnings of expropriations for replacement of capital assets) as described in Note 2 to the Balance Sheet differs from that normally accepted in the United States. However, in all other material respects the accom panying financial statements, in our opinion, have been prepared in conformity with accounting principles generally accepted in the United State*. February 28,1961 HASKINS & SELLS 23 Reproduced with permission of the copyright owner, Further reproduction prohibited without permission. FRUITION of years of planning arid development, St. Joe's new Vibur num lead project in Missouri en tered production in July, I960. Strengthening the Company's posi tion in the lead mining industry, the project is a model of modern mining and milling techniques. With one mine in production, one in develop ment and a third in the planning stage, the Viburnum mill is now op erating at a rate of 3,000 tons per day. Eventual expansion to 6,000 tons is expected. Shown here are the crushing plant at the mill and the headframe of one of the mines EMPLOYEES-I960 ST. JOSEPH LEAD COMPANY, NEW YORK Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. employees of St. Joseph Lead Company and their families From the viewpoint of profit, 1960 was a year of dis appointment for St Joe, as it was for many Ameri can corporations. As a glance at the opposite page will show, our earnings declined to $1,09 per share of common stock from 1959's $2.30 per share. A slump in the year's metal sales hurt us in two ways: first, by reducing our income, and secondly by leaving us with large stocks of unused zinc and lead concentrates and unsold zinc and lead metal. In addition, our earnings were reduced still farther by what we paid out in 1960 for shaft sinking and mine development at our new mining properties. Viburnum and Pea Ridge. We did much, however, to strengthen our vari ous Divisions; we brought the new Viburnum lead property into production; we made satisfactory progress at the Pea Ridge iron ore project; our for eign operations performed better than expected. It was not, in short, an entirely gloomy year. This report gives you the facts on both the bright and the dark side of the St. Joe picture for 1960. Declining general business ac tivity results in reduced sales of both lead and zinc At the end of 1959 we had every reason to hope for a good year in 1960. With the settlement of the steel strike, business forecasts were in agreement that no decline was in prospect. Only one element was lacking to fulfill the opti mism of these forecasts. Consumers in the United States lacked purchasing power for many capital goods purchases that the forecasters had counted on. Sales of automobiles were lower than antici pated; as were sales of major appliances. This slowed steel companies' sales, and thus had an ad verse effect on almost every other American busi ness because the rate of activity in steel influences all manufacturers. Instead of a ready flow of buying orders, salesmen in almost every line of activity, including our own, met increasing resistance as in- Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. What We Made ... and How We Spent It We Sold: Pig lead, tons Slab zinc, equivalent, tons Sulphuric acid, tons .......... We Received; From sales From our investments From other sources Our gross income totaled . .. We Kept in Reserve: To replace worn-out plants and equipment To replace depleted ore reserves We Paid: In wages, salaries, supplies, and other production costs In exploration and in developing new orebodies In sales, administrative, pension fund, and other costs In Federal income taxes In interest on long-term debt ; We Had Left: A net income amounting to Of which, we paid as dividends to our stockholders And kept for use in the business Our net earnings, per share of stock, amounted to Our dividend payments, per share of stock, amounted to Our Current Assets (at year's end) Our Current Liabilities (at year's end) Our Net Working Capital (at year's end) Number of Our Employees Number of Our Stockholders Shares of Our Stock Outstanding I960 131,852 158,276 186,722 $79,634,096 2,508,255 371,974 82,514,325 3,647,485 119,435 68,985,713 2,880,829 2,409,823 326,930 1,172,042 2,972,068 2,717,222 254,846 1.09 1.00 45,178,167 7,485,650 37,692,517 4,171 10,651 2,717,222 1959 164,084 179,478 176,607 $86,179,208 2,865,986 575,543 89,620,737 3,200,352 134,296 72,967,543 1,850,552 2,532,294 1,518,318 1,154,307 6,263,076 2,716,222 3,546,854 2.30 1.00 50,098,983 7,456,767 42,642,216 4,263 11,812 2,716,222 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. THE DOMESTIC SITUATION I960' ' 1^59 SHORT TONS ESTIMATED ZINC I960 1969 SHORT TONS ESTIMATED From domestic mines 244.000 256,000 From domestic mines* 349.000 317,000 Scrap ., , . 440.000 418,000 Secondary sources . . . 48.000 58,000 Imports (net) ............ 354.000 408,000 Imports (ore and metal) 571.000 656,000 Supply (not incl. stock) 1.038.000 1,082,000 Supply (not incl. stock) . 968.000 1,031,000 Consumption .... 1.026.000 1,091,000 Consumed and exported 936.000 968,000 Surplus or (deficit) . . 12,000 (9,000) Surplus or (deficit) . 32.000 63,000 *After deducting ores used for pigment production ventories of unsold goods began to climb. age of lead. Consumption of lead for storage bat Thus, by the spring of 1960, it became clear that teries was down a little, owing to the spreading use I we would have to revise our sales estimates down ward, and that any improvement in business activ ity would certainly be delayed until the end of the year. Consumption of lead in 1960 declined about 5(/< of compact cars, which use smaller batteries than the larger 1959 automobiles. It is interesting to note that there was even a slight increase in consumption of lead for cable covering, a circumstance largely due to the efforts below that of 1959. Along with this decline, lead of the Joint Research Program of the Lead and Zinc consumers used up their stocks of metal instead of Industries. In general, however, our lead sales de buying more, with the result that smelters of lead, clined from the first quarter of the year, improved like St. Joe, found their own stocks of unsold metal somewhat in the third quarter, but showed no great increasing. Every lead-consuming industry used improvement during the remainder of the year. less metal in 1960 than in 1959, with the exception of the manufacturers of tetraethyl lead, the anti knock fluid added to gasoline. Consumption here increased 3.47', largely because of the introduction PROSPECTING is faster with this air-powered down-the-hoie drill rig developed by St Joe. It can put down a 700-ft. hole and may replace six churn drills of a new type of fluid containing a higher percent- PROCESS IMPROVEMENTS are constantly being sought. Here a Josephtown technician checks effect of varying chemical composition on properties of zinc sinter for furnace feed Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Zinc suffered as well. Instead of the increase in consumption for which we had hoped in I960, total consumption for the year was off by about 10/'?. The bright spot in the industry was the 16^? in crease in the production of zinc-coated steel by the relatively new continuous galvanizing process, now in use by most major steel companies. Consump tion of die-cast zinc declined, largely because of the increased production of compact cars which carry less zinc than the larger models. Consump tion declined in other zinc-consuming industries. Our employees, particularly at Josephtown and Balmat and Edwards, will be pleased to know that St Joe zinc sales declined much less than did zinc consumption generally. We did better than the in dustry average simply because the new refinery at Josephtown enabled ns to offer Special High Grade zinc in addition to our regular grades. Thus we sold considerable zinc that would otherwise have gone into our stockpile. EARNINGS Lower sales meant lower profits. Also part of earnings had to be plowed back Reduced sales meant lower earnings. In addi tion we received a somewhat smaller income Iron! foreign investments than in 1959, hut then* were two additional factors that materially reduced mu net earnings. In 1960 we paid about $2,700,000 out of earnings for shaft sinking and mine development at the Vi burnum lead properties and the Pea Ridge non ore project, both in Missouri. This is like paying cash for a new automobile instead of buying it on the easy payment plan. It cut our earnings for I960, but will benefit us greatly from the present saving in taxes and on interest payments in futme years. In addition, early in 1960 we contracted to por chase substantial tonnages of zinc concentrates in anticipation of sales of metal which never material ized. The basic problem, which involves the sales and, therefore, the earnings of domestic Lad and zinc producers, is that production of both metals on a worldwise basis is in excess of consumption. Many producers, including St. Joe, have therefore cur tailed production, either in I960 or early in 1961, a measure that we hope will he temporary. Neverthe less. the outlook for any substantial increase in zinc and lead sales in the immediate future is not good. Our rate of sales is necessarily tied to the rate of general business activity, and any substantial in crease is not yet in sight. During 1960, legislative efforts to aid the do mestic mining industry were unsuccessful. A bill to increase tariffs on imported lead and zinc died before being acted upon by Congress. A second lull, providing subsidies for small mining operations did pass Congress but was vetoed by President Eisen- PULVERIZED ZINC OXIDE for use as pigment in the paint industry is prepared in this fine-grinding mill at Josephtown. Powdered oxide is drawn off by air separator directly into bags EASY POURING of the new lead-antimony 1000-lb. ingots at Herculaneum smelter becomes possible with this swivel feed pipe and semi-circular rack i 1 ,3J< Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. hower. The essence of our problem is still excessive imports of lead and zinc, which, although they de clined in 1960 as compared with 1959, are still at an unnecessarily high level in view of domestic de mand. We believe that an equitable tariff is the best solution, and if the Administration would ac cept the recommendations of the Tariff Commis sion, such legislation might be enacted. The present quota system, which is aimed at stimulating the domestic mining industry by restricting imports, has not proven effective in achieving its objective. Efforts have been made to solve the problem on an international basis through the meetings of a United Nations study group representing all of the lead and zinc producing nations in the world. The United States is represented at these meetings by the State Department, aided by industry advisers, Some observers believe that at the next meeting of this group, scheduled for March 1961, some limi tation on world production of lead and zinc may he established. Lacking adequate tariff legislation or sufficient voluntary limitation of production, the domestic lead and zinc industry, and St. Joe, must expect con tinued low prices in 1961, sales at about the present level, and a continuing urgent need for maximum efficiency and careful planning throughout its operations. SLABBING PILLARS in high stopes of the older Lead Belt mines in Missouri calls for ingenuity in providing a safe, effi cient drilling platform. This converted loader does the job OPERATING ECONOMIES are anticipated with this batterypowered fork-lift truck at Herculaneum. It carries a one-ton load of new-type linked ingots, strapped for shipment OUR DOMESTIC DIVISIONS During 1960 each Division did its best within the limits of manpower and money available to improve technical efficiency and revise its operating pro cedures in line with the reduced demand for the Company's products. These efforts must be con tinued with increased emphasis in 1961. SOUTHEAST In the Lead Belt several MISSOURI changes were made to ad just to decreased demand for lead. A construction program at the Federal mill, begun in 1960 and to be completed in 1961, eliminated the old tables used for producing gravity NEW DIESEL TRUCK contributes safe, fast haulage of 10-ton loads in the new Viburnum project mine. Shovel is old origi nal St. Joe type, still tops in efficiency and endurance Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CENTRAL CONTROL STATION in new zinc-flotation circuit at Balmat mill. New machines handle all mill feed more efficiently than the pneumatic equipment which they replaced, GRINDING BAY at Viburnum. Crushed ore goes through rod mill (left), then into cyclone separator. Fines go to flotation, coarse to ball mill (right) concentrate and converted the mill to an all-flota tion procedure. In addition, flotation circuits were added to produce a copper concentrate, and the mining program was revised to mine more of the copper-bearing ore from the Federal group of mines. This program is aimed at improving effi ciency and reducing production of lead concentrate without a corresponding reduction in income, inas much as the copper concentrate will make up for the loss in lead. At the Leadwood mill, circuits were added to permit production of a zinc flotation concentrate, and the mine program was revised to produce ore of higher grade in zinc. This had the same objective as the copper flotation development at Federal. At the end of the year both operations were approach ing accomplishment of the desired objectives. Mining and other research programs in the Lead PROGRESS AT PEA RIDGE. Large building houses shops and warehouse. At right is carpenter shop. No. 1 Shaft (center) is used for exploration and development of the iron orebody. Belt have yielded improved results in drilling, blast ing, ground support, and in exploration for new ore. An example of the latter is a deep-drilling mechan ism designed and built by the St. Joe staff. It is believed this new drill can replace six of the oldtype churn drills used in surface exploration. HERCULANEUM Flexibility also char acterized Herculane um's operations in 1960. Customer requirements have called for casting lead ingots in new sizes and shapes and also producing special lead alloys to special order. In addition, the refinery building was expanded in 1960 and two new 250-ton kettles in stalled. The silver refinery was rebuilt and con struction was begun on a new baghouse, which is designed to filter 350,000 cubic feet of exhaust gas pier-minute. A third blast furnace was constructed of a new design that has proved so successful the two older furnaces will be modified in conformity with the new one when they reach the end of their present runs. BALMAT The zinc flotation circuit EDWARDS in the Balmat mill was im proved in 1960 by com plete conversion to mechanical flotation machines. A long series of tests had showed that the new machines offered savings in power and reagent costs, and would also yield a higher recovery of zinc. The new circuit was performing satisfactorily at the end of the year. The safety records at both Balmat and Edwards showed general improvement in 1960, and were better than the national average of underground metal mines in both frequency and severity. The Edwards surface operations have now completed five years without a lost-time accident. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. JOSEPHTOWN Much research is clone at fosephtown on a both short and long-tei m basis, the objective being to improve operations and strengthen our ability to meet competition. Research projects in 1980 centered on furnace charge preparation, im proved furnace performance, and on improved residue recovery. The cadmium plants improve ments arc well established and profitable. With cus tomer requirements becoming stricter and more diverse, faster, more accurate, analytical techniques have been developed. Scrap zinc materials made up a large part of the smelter feed in 1960. To handle this scrap, a new secondary materials plant was built, and became fully operative in July. The zinc oxide department developed new grades, superior to our competition, for the paint industry, and a new grade was offered to rubber manufacturers. Research is now proceeding on improved quality of zinc oxide and on new uses for it. At the close of the year, construction of additional refining capacity for Special High Grade zinc had made satisfactory progress, and plans were under way for production of additional types of zinc oxide, such as acicular and French process. ect of Meramec Mining Company in which St. Joe and Bethlehem Steel Company are equal share holders. As of this writing the railroad into the mine and plant site has been completed, and the shop, warehouse, and office buildings are in use. The No. 1 Shaft reached a depth of over 2,000 feet by the end of 1960, and exploration drifts had be gun to outline the orebody. This work was done largely by diamond drilling from the 1675-foot level and the ore is proving to he of the expected grade. The orebody has also measured up to ex pectations in tonnage. The No. 2 Shaft, which will he the main hoisting shaft, was approaching a depth of 1,800 feet at the end of the year. No par- VIBURNUM The Company's new lead mining property at Vibur num, Missouri, entered production as of July 15, 1960. Ore will eventually come from the three mines in the vicinity of Viburnum which will be serviced by Shafts Nos. 27, 28, and 29, with the mill being centrally located at Shaft No. 28. Ore is currently coming from Shaft No. 27* and devel opment is proceeding at Shaft No. 28. The present rate of milling is 3,000 tons per day which will be eventually expanded to 6,000 tons per day when all three shafts are operational. Only preliminary work has yet been done at the site of Shaft No. 29. Both mining and milling operations at Viburnum arc re garded by the mining industry generally as models of modern and efficient large-scale mining and mill ing. In both mine and mill every device that the St. Joe staff could develop or discover has been, in corporated to increase efficiency or to make control easier and more nearly automatic. Complete community facilities have been pro vided at the Viburnum townsite near Shaft No. 28 and the mill. A shopping center, school, and church have been constructed and are in active use. BALMAT-DESIGNED one-man loading gate can really be oper ated by one man, It provides fast, clean loading of cars on haulage levels of the Balmat mine in Northern New York State tieular difficulty had been encountered in sinking this shaft. Shaft sinking and development expenses by St. Joe at the Pea Ridge and the Viburnum projects totaled about $2,740,000 in I960, all of which was charged against 1960 earnings. It is expected that the Pea Ridge project will begin production by about the middle of 1963. PEA RIDGE Shaft sinking and devel opment work progressed all through 1960 at the Pea Ridge, Missouri, projr OIL OPERATIONS in the two unitized fields in west Texas in which we have a working interest yielded in 1960 a revenue to St. Joe of $336,812, :' 8 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. During the year improvements were made for the purpose of prolonging the productive life of the fields and maintaining low costs. These improve ments included expanded water and gas injection facilities and field automation. No investment was made in oil exploration during 1960. FOREIGN OPERATIONS Aguilar's earnings maintained; production increased at Santander in Peru the resumption of full business activity in Argentina and the commencement of operations in the new electrolytic zinc plant in which Aguilar has a 50r/( interest. If President Frondisi can maintain political stability, and make a real attack on the problems of balancing the budget and the rehabilitation of Argentina's railroad system, Argentina's future could be quite bright. Aguilar, itself, is in an excellent position both as to ore reserves and competence of the entire staff. Sulfacid, S. A., (50% owned by Aguilar) showed earnings of about 31,000,000 pesos in 1960 as com pared with 27,000,000 pesos in 1959. The new electrolytic zinc plant was well along in construc tion by the end of the year and may enter produc- j ] i j i 1 \ ^ i LOADING TRUCKS in Santander pit is tough job because of unusually abrasive, blocky ore. This front-end loader Is re placing a shovel under repair in the hard-working shop Cia. Minora Aguilar, S. A., showed earnings in 1960 of about 157,500,000 pesos, as compared with about 163,000,000 pesos in 1959. The peso remained stable throughout the year at about 82.6 to the dollar, and therefore the equivalent dollar earnings for 1960 are comparable to those for 1959. Argentina suffered a business recession early in 1960 and showed only small signs of recovery by the end of the year. This has caused a drop in demand for lead and zinc, and Aguilar's earnings would have suffered correspondingly had it not been possible to export substantial tonnages of zinc sinter and zinc concentrates to the European mar ket. None of this material entered the United States. These exports will not he continued beyond tion at a planned capacity of 18 tons per day by the end of 1961. The output of this plant, special highgrade zinc, should fill a growing need in Argentina's new automotive and appliance industries, Cia. Metalurgica Austral, S. A., (43.3% owned by Aguilar) suffered from a drop in demand for slab zinc early in 1960, but sales were showing improvement by the year's end. Enthusiastic Argentine technical staffs at both Austral and Sulfacid made notable improvements in the processes at both acid plant and smelter during the year, Cia. Minerales Santander, S. A. The open pit leadzinc-silver mine in Peru, in which St. Joe has a more 9. ` Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. than two-thirds interest, was being equipped as 1960 ended to increase its mining and milling ca pacity from 13,000 to 15,000 tons of ore per month. Equipment was being purchased to increase the stripping rate in the pit, and camp facilities were being improved. In 1960, 155,757 tons of ore were milled for a production of about 5,000 tons of lead concentrate and 32,720 of zinc concentrate. Santander's lead concentrates are now being smelted in Peru and in Germany, and except for a small tonnage of zinc concentrates that enters the United States under the prevailing quota, the bulk of the zinc concentrates is smelted in Belgium and Germany. In 1961, additions to the power plant and to the mill should permit treatment of still greater ton nages of ore. The open pit is being diamond drilled in order to yield information that will aid both in conducting present mining operations and in plan NEW MARKETS Competition from other materials forces lead and zinc to seek new uses in other fields In the nearly 100 years of its corporate history, the St. Joseph Lead Company has regarded itself as solely a producer of primary lead, and, since 1936, of zinc. Our emphasis has constantly been on locating good orebodies and on mining, mill ing, smelting, and refining ore from them to best advantage. However, in recent years, our reports to you have mentioned with increasing frequency our efforts to enlarge the usefulness of lead and zinc and to main tain, or increase, our sales of these metals against the competition, not only of other domestic and foreign metal producers, but of other materials, such as aluminum and plastics. Furthermore, we will face in the future competi tion from technological developments that may cut deeply into existing markets for lead or zinc. Lead, for example, faces a threat some years hence in the PENTHOUSE atop headframe of Pea Ridge Shaft No. 2 will enclose one of few tower-mounted friction-type hoists in U.S.A. it offers low first cost, low operating cost, maximum safety NEW HOIST at Aguilar mine in Argentina. Hoist room is under ground and new equipment opens way to deeper levels of mine, prolonging life of this property for many years ning for an eventual shift to underground mining several years from now. In North Africa where St. Joe has a 17.15% inter est in two lead and zinc mining and milling compa nies, operations were gradually improving in 1960 and dividend income from these investments in 1961 should be somewhat higher than in 1960. In Canada, as this is written, no decision has yet been reached as to the means of bringing into operation the properties of Brunswick Mining and Smelting Corporation in which St. Joe has had a 40% interest since 1954. Various alternatives were being considered. 10 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CONTINUOUS STRIP of steel is coated with zinc in galvanizing process made possible by tailor-made zinc alloys St. Joe pioneered. Galvanizing is now industry's brightest prospect ROAR OF THE JETS is silenced for passengers by a sound proofing envelope of lead-impregnated plastic that encloses cabin. St. Joe is actively seeking other new uses for lead fuel cell, a source of electric power that would use neither lead-acid batteries nor leaded gasoline. Obviously, our effort to meet competition must take at least two forms: first, we must continuously and relentlessly strive to keep production costs down and efficiencies high, because our most seri ous and immediate threat to profitable operation is the low selling prices of our metals. Secondly, we must expand our efforts to find new uses for lead and zinc, to determine what it is our customers need and want, and then provide them with it. An excellent example in zinc is the great current growth in production of zinc-coated steel from con tinuous-line galvanizing units, a development first made possible by St. Joe's willingness and ability to provide tailor-made zinc alloys to steel companies. Another example is a growing need in the con struction industry for lead-impregnated plastic, or other bonding material, in sheet form to use as soundproofing. This use is so new that few details can be given, but potentially it offers an opportunity for lead that could be quite as attractive as the use of tailor-made alloys was for zinc. In addition, the construction industry uses large quantities of lead in mats under columns in buildings to dampen vi bration. St. Joe is actively seeking more such opportuni ties to expand the use of lead and zinc, both on its own and in association with other domestic and foreign lead and zinc producers through the Joint Expanded Research Program of the Lead Indus tries Association and the Zinc Institute. In the years ahead, you will find lead and zinc turning up in new markets, and you may find St. Joe turning up in new fields, of which iron ore mining at Pea Ridge will be only one. THE OUTLOOK The signs are multiplying that competition among metal producers, both domestic and foreign, in United States markets will steadily grow more severe, unless general business activity improves sufficiently to push metal consumption ahead of production, or unless favorable Government action is taken to curb excessive imports of lead and zinc. The immediate outlook is therefore probably one of meeting this tougher competition by continued effort to cut costs, increase efficiency, and through intensified research, to find ways of improving our present operations. From the long range point of view, the lead-zinc industries are realizing for the first time that it is not enough simply to produce metals and offer them for sale. We must find new uses, and devise aggres sive means of locating new markets for our metals and then satisfying them. It is true that a growing population will slowly expand the market for lead and zinc, but the opportunity is there for us to in crease our sales at a greater rate than the population growth. It is an opportunity we intend to grasp. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.