Document gbQ3rJj2y17LEvNX9ag8enOXV

i u Hi:: Anaconda Copper Mining Company CAPITAL STOCK December 31, 1933 Authorized, 12,000,000 shares. $50 each Issued, 8,919,086 shares, $50 each $600,000,000 445.954,300 OFFICERS President..................................... Vice-President.............................. Vice-President and Treasurer Secretary and Assistant Treasurer General Auditor Assistant Secretary .... CORNELIUS F. KELLEY JAMES R. HOBB1NS ROBERT E. DWYER DAVID B. HENNESSY JAMES DICKSON KENNETH B. FRAZER DIRECTORS Percy A. Rockefeller Cornelius F, Kelley Andrew J. Miller Grayson M.-P. Murphy Charles E. Mitchell Charles T. Fisher James R. Hobbins John A. Coe Robert E. Dwyer PNYC 00010040 N11743 To the Shareholders of Anaconda Copper Mining Company: The general decline in business that occurred during the first quarter of the year affected adversely the business transacted by your Company, which declined to a lesser volume than had been reached dur.ng any similar preceding period. The upward trend during the second quarter embraced; all non-ferrous metals and rapidly increased the business of the Company, reaching a peak for the hear in Julyi when; an increase in volume of approximately 'OQ1^ above the minimum.of. February Was, transacted, A recession in business followed, which continued until November, the volume being, however, substantially above the low level of the first quarter. A slight improvement over November was experienced in December, since which time the upward trend his continuetk Copper statistics were more favorable than during the preceding year, as both domestic and foreign consumption, respectively, exceeded production. World production of primary copper is estimated! at 1.100.000 tons, compared with 988.4-00 tons for 1932. The preliminary report of the U. S, Bureau of Stines, states ;238,300 tons of primary copper were produced in the United S'tates, leaving a balance of`861,500 tons from foreign sources;, compared with "16,395 tons in 1932, World consumption of primary copper during 1933 is estimated at 1.226,606 tons, as compared with 953,401 tons, (revised), in 1932. The domestic market consumed about 294,579 tons, or 4:64 pounds per capita, compared with 250,622 tons in 1932. Foreign consumption increased to 932,027 tons from 702,779; tons during the prior year. The above estimates indicate a decrease of 84,500 tons in stocks of copper in the United States. 42.106 tons abroad; a total decrease of 126,606 tons in world1 stocks. No accurate statistics are available as to the tonnage reused from secondary copper materials.. Quotations for; all non-ferrous metals improved during the year. As reported by the Engineering and Mining Journal, prices of the principal metals were as follows: Copper, per lb. Lead, " " Zinc. "" Silver, per oz. Jan. 1 4,7756 3.0006 3.1256 24.5006 High 8.7756 July 8 4.5006 July 10 5.0006 July 19 45.0006 Nov. 14 Dec. 30 8.02S6 4.1506 4,3506 44.6256 Average 7.0256 3.8696 4.0296 34.7276 Domestic silver mined since December 21, 1933, is valued at approximately 64J-j|6 per ounce under the President's proclamation issued that day. The domestic price of gold was *34.06 per ounce at the close of the year. 3 The increase in Silver anil yoUi prices during the year had an influence upon ali metal production departments of the Company, particularly those situated within the United Prates, Lead ores are mined ior their silver quite as, much as, for their lead content. The <nnc ores produced from the mines of the Company in Montana contain substantial values in 'ii\er. The increased prices of silver and gold prevailing at cne dose'of the year result in a credit ol approximately 2c per pound to the cost of copper produced from the Butte mines. At the present scale of operation the domestic mines of'the Company, including zinc mines, are producing approximately 4.,300.000 ounces of silver and 7.300 ounces of gold per year. The foreign mines: owned by subsidiary companies are producing approximately 50(1.000 ounces of silver and 20.000 ounces of gold per year. FINANCIAL Gross sales and earnings of the Company upon a consolidated basis totalled 372.902.493.83. compared with $52,295,610.84 for the previous year. The cost of sales, including all operating expenses, current development, maintenance charges, repairs, selling and general expenses and taxes amounted to $67,941,747,96, compared with 557.240.906.30 for the previous year; resulting in an operating income of 34,960,745.89. Other income amounted to SI.984.935.68; making a total of 36.945.679,57. Deductions from income for interest on current obligations and bonds amounted to $5,201,086.83 and for expenses of carrying non-operating properties to 32.876,801.08. a total for these items of 38.077,887.91; resultihg in a loss of 31.132.208.34 before deducting charges for discount on bonds of 3534,254.53 and depreciation and obsolescence of 35,155,672.49. After all charges the deficit for the year was 36,822,115.36. Metals in inventories at the beginning of the year were carried at the low market prices then prevailing, which were lower than costs. However, the metals sold from inventories were charged into income account of the year at cost, and the difference between cost and such inventory prices was credited to surplus. Metals in inventories on hand at the close of the year were valued at production costs of the year, such costs being lower than the market prices prevailing. Metals in process were also restated at current production costs. The credit to surplus resulting from these adjustments was 33,715,031.32. and after allowance for reserve for contingencies and other adjustments amounting to 3954.975.67, and the deficit of 36,822,115.36, the net decrease in surplus amounted to 34,062.059.71, compared with the decrease of 327,593,170.43 in 1:932 after similar charges and adjustments. During the second quarter of the year, in liquidating accounts of subsidiary companies selling copper in export markets, with Copper Exporters. Inc., which suspended operations, loans of 12,998,000.00 were made. These loans were repaid during the last half of the year, as was an additional 3602,000.00, thus decreasing, from September 1st to the close of the year, notes payable by the amount of 33,600.000.00. Further advances were made to the Inspiration Consolidated Copper Company, on its procmssorv notes secured by Flt-t Mortgage ^ Gold Bonds of that Company, making; its total liability* to this Com'parvv 55.595.00.0.00 as of the close of the year. There were retired during the year $2,497,000.00 par value of 20-Year $% Debentures f the Chile C-'pper Company, and SU3-.QflO.00 par value of First Mortgage-5% Sinking Fund B<r.ds -f the Butte. Anaconda d: Pacinc Railway Company, including such debentures and bonds as were held in the treasury at the close of the year. Capital expenditures amounted to $ri4.8ll.73. OPERATIONS The Butte mines operated during the year at the rateof about 23% of their capacity. As a result of this drastic curtailment, large expenditures were incurred for maintenance of non-operating units. These disbursements were charged direct to current operations. The Electrolytic Zinc Plants in Montana, which were shut down in May. 1932. resumed production in. January. 1933. The demand for high grade zinc increased at a rapid rate, permitting operations at about 80% of capacity by the month of August. Due to the shortage of custom concentrates, operations at the dose of the year were approximately 60% of capacity. The zinc produced is high grade, commanding a premium in the open market, and also serves as the basis for the Company's, zinc oxide operations at East Chicago, Indiana, and Akron. Ohio, which operated on a satisfactory basis during the year, as did the white lead plant at East Chicago. The properties at Cananea and Chile are producing at a combined rate of approximately 18.000,000 pounds per month, or 28% of their normal capacity. Andes and Cananea ores contain substantial amounts of precious metals, and, in addition, molybdenum is being recovered from Cananea ores as a high grade molybdenum sulphide concentrate, for which there is a ready market. A substantial revenue is being derived from the byproducts and is credited to the cost of copper produced. Copper The production of Anaconda and its subsidiary mining companies, including custom ores and ore treated on toll, from operations for the year 1933 was as follows: Copper lb*. Silver ozs. Anaconda Copper Mining Co.............. ......... 93,277.658 2.391.635.29 Andes Copper Mining Co.................... . .. 35.760.730 101,161.16 . 123,045.827 Creene Cananea Copper Co.............. 31,793.290 378.335.35 Gold 025. 20,731.826 6,625.705 13,528.003 Total.......................................... . 303,377.503 2.871.131.80 40.885.334 o Gosper production from the domestic mines of the Company was 92.721.423 pounds, and from the mines of subsidiaries: operating outside the United States was. 210.599.847 pounds, a total for the year of 30.3J31.27O pounds. Deliveries for the vear were 278.074.577 pounds in the domestic markec and 204.269.685 pounds in the foreign, market, a total of 477.544.262 pounds; resulting, after allowing for custom, set ,ndary and purchased copper, in a decrease of. 1 12,353.375 pounds in stocks of copper on hand. Zinc Since the resumption of operations on January 18. 1933, production of electrolytic zinc amounted to 161.307,768 pounds, of which 121.268,022 pounds were produced during the last six months of the year. Deliveries were 148.886.307 pounds. The stock of zinc on hand at the close of the year was nominal. Custom Smelting and Refining The smelting plant of the International Smelting Company at Tooele. Utah, operated on a curtailed basis on custom ores and concentrates. The lead bullion produced was shipped to the lead refinery at East Chicago, and the converter copper to the Raritan Copper Works. The lead refinery of the International Lead Refining Company at East Chicago, Indiana, also operated on a curtailed basis, treating lead bullion received from the smelting plant at Tooele, lead bullion derived from the zinc residues produced by the zinc plants, and secondary lead materials, The operations of the Raritan Copper Works at Perth Amboy, N. J., were mainly dependent upon the copper refined in bond for the Greene Cananea Copper Company and Andes Copper Mining Company. The custom smelting and refining operations produced from custom and toll materials 4,386,404 pounds of copper, 36,935,866 pounds of lead, 1,913,738,23 ounces of silver and 10,518.677 ounces of gold. Deliveries of lead during the year were 51,714,896 pounds and stocks at the end of the year were normal. Miscellaneous Products Miscellaneous products consisted of 32,084,904 feet lumber; 8,144 tons treble-super phosphate and phosphoric add; 6,714 tons arsenic; 676,072 pounds cadmium; 70,550 pounds nickel sulphate; and 196,322 pounds copper sulphate. 6 pNYC 00010Q44 Fabricating Plant* The combined output of manufactured products of The American Brass Company, ''including Toronto plant) and of the Anaconda' Wire and Gable Company amounted to ASA.479.098 pounds, compared with 29t.t42.40l pounds in the prior tear, an increase of iFc- The copper requirements of these mills have been consistently in excess of current domestic production from the Company's properties. SILESIAN-AMERICAN CORPORATION The principal amount of Fifteen-Year 7% Collateral Trust Sinking Fund Cold Bonds of Silesian-.American Corporation was reduced by it during the year from $8,608,500.00 to $7,910,000,00. Principal production for the year was as follows: Zinc.............................. ..................................... '.... Lead....................................................................... Coal... ............................................................. . ..... Sulphuric Acid...................................................... Superphosphate................................................... 78,321,492 pounds 18,047,426 1,413.824 metric tons 43.364 " " 18,692 " " GENERAL The physical condition of all mines and plants of Anaconda and its subsidiaries is excellent. Wherever possible, the organizations have been reduced or placed on part-time to fit the curtailed operations, without, however, impairing their efficiency or imposing unnecessary hardship on the members of the staffs and employees, whose unstinted coopera tion in meeting the difficult situations which have confronted the Company during the year of depression is deserving of commendation. NUMBER OF STOCKHOLDERS The number of registered stockholders appearing on the books at December 31, 1933. was 122,278. _______________________________ There is attached hereto a Consolidated Balance Sheet showing the financial condition of the Company and its subsidiary companies at the close of business December 31, 1933. together with an Income Statement for the year, prepared and certified to by Messrs. Pogson. Peloubet & Company, Certified Public Accountants. By Order of the Board of Directors. New York, N. Y., April 19, 1934. CORNELIUS F. KELLEY, President. 7 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Balance Sheet--31st December, 1933 Mines, and Mining' Claims. Coal Mines, Timber Lands", Phosphate Deposits, Water Rights arid Lands tor Metal Producing and Manufacturing Plants............... ............................................ .........$298,733,684.26 264.246,468.79 27,546,835.21 S590,528,988.26 88,550.247.92 5,254.209.64 11,604,457.56 ANACONDA COPPER MINING COMPANY ar?d Subsidiary Companies Consolidated Balance Sheet--31st December, 1933 LIABILITIES Ca p it a l St o c k of Anaconda Copper Mining Company: Authorized, issued, 12.Q0Q.QG0 sharesot $50.00 each 8.919.C36 shares................. Held through Subsidiaries. 245,253 shaires.................. Ca p it a l St o c k a n d Su r pl u s of Subsidiary Companies owned by Minority Interest.......................................... S-t+5.954.dOO.t)0 t2.262.650.00 $433,691,650.00 4.583.366.25 Bo n d s Ou t s t an d in g : Chile Copper Co. Twenty Vear -5% Gold Debentures.due 1947........................................................ Butte. Anaconda & Pacific Railway Co., First Mortgage 5% Sinking Fund Gold Bonds, due 1944........ 1............................................................... $30,889,000.00 1.774.000.00 32.663,000.00 Re s e r v e s : For Depreciation............................................................ $103,293,258.92 For Insurance, Renewals and Contingencies.............. 2.619.018.28 105.912.277.20 Cu r r e n t : Notes Payable.............................................................. Taxes and Interest Accrued......................................... Accounts and Wages Payable...................................... $69,898,000.00 2,008.878,02 5.673,687.87 77,580,565.89 Su r p l u s ..TM............................................................................... 37,999,229.49 $692,430,088.83 Note--In order to comply with the Government Income Tax requirements for the purpose of computing depletion, additional valuation* of the mining properties have been recorded upon the books of the companies: but, for the sake of uniformity, the resuit of those entries has been omitted from the current statements. 9 ANACONDA COPPER MINING COMPANY and Subsidiary Companies Consolidated Income and Surplus Account--Year Ended 31st December, 1933 Cross Sales and Earnings............................................................................... Cose oi. Sales;--operating expenses, development, maintenance and repairs, administrative, selling and general expenses and taxes-- sales to the extent of current production being applied at current costs..................................................................,.............;.......................... Operating Income............................................................................................ Other Income--Interest, dividends, profit on bonds retired and mis cellaneous income............... ........................................ --Interest on notes and accounts of affiliated companies.... $12,902,493.85 67,941.147.96 -- ... . ---------- $4,960.74,5.89 $1,382,899.02 402.034.66 1.984,933.68 Interest on bonds and current obligations..................................................... Expenses pertaining to non-operating units......................................... $5,201,086.83 2,876,801.08 $6,945,679.57 8,077,887.91 Provision for depreciation and obsolescence..-............................................. Discount on bonds............................................................................................ $5,155,672.49 534.234.53 $1,132,208 J4 5,689,907.02 Net Loss--on current basis.............................................................................. Deduct: Credit to Surplus for realization of difference between cost and market value at 31st December, 1932 on metals on hand at that date sold in 1933 and for restoring to current cost, which is below market, finished metals on hand at 31st December, 1933........ ............................................................................................ Less: Reduction of inventories of metals in process to normal cost............................................. Additions to reserve for contingencies and other adjustments applicable to prior $1,83S,030.29 years................... ,........................................ 954.973,67 $5,550,061.61 2,790,005.96 $6,822,115.36 2.760,055.65 Add, Minority share (income) $4,062,059.71 257.17 Surplus, 31st December, 1932........................................................................ $42,038,286.19 Minority Interest (deficit)............................................................... 23,260.1"8 $4,062,316.88 42.061.546.37 Surplus, 31st December, 1933..................................................................... $37,960,880.74 Minority Interest (deficit) including adjustments for Minority Interest acquired during year.......................................................... 38,348.75 $37,999,229.49 T-j (he'Board of Directors-, An a c o n d a Co p pe r Mt.vt.Nc Co mp a n y . '5 Broadway, New York. We have made a general audit of the books and records ei Anaconda Copper Mining Company and its forty-six subsidiary corporations (companies 75% or more owned and directly or indirectly operated under Anaconda Copper Mining Co. management) for the calendar year 1933 and in accordance therewith submit herewith a Consolidated Balance Slieet add Consolidated Income and Surplus Account. In .connection with our audit' we examined or tested the accounting records of the cornpanv and other supporting evidence and made a. general review of the accounting methods and of the operating and income accounts for the year b.ut we dicl1noti^alrt:,^;dieta;il^;:audib.of:'che transaction*. 1 Included in supplies and other items, amounting to $21,730,163.63, is $14,154,910.46 of supplies. Owing to curtailment of operations and distance from markets and source of supply certain stocks are somewhat in excess of current requirements!; The greater part of the remainder of this item consists of ores and metalliferous material and advances on oresiwhtch will not in all probability be drawn on for metai production or liquidated until operations are resumed.on a more normal basis. Metals in ptocesa have been reduced to normal cost which approximates current production cost. Finished metals are valued at current: production cost, including depreciation, which is below market. Assets able secu^.eii^liL^ii^.dte^ and all |j incertificate, or correspondence (investments, market bonds and capital stock) and found in order /ar^llfsrpyiH^l^fpr1 i!ct Balance 'Sheet- AccoUaU:iheCeiyable'''wt:i|'fei^p3ined''indetailapd thosC'COQsidered' bad or doubtful'have Seen written of? or provided for in reserve. The Income Account is stated as ip previous years on a cost basis with the exception, however, that cur rent costs were applied to metals sold .to the extent of current production, inventory costs being applied to sales in exceasof production. Curtailed operations and inventories larger than normal necessitated the adop tion of ch;ia|i|rni^|!Iin':i 0^1^';:tp|jjrpa^ properly resul^!i|c^' the year's operation*. Gains resulting from the adjust ment of inventories at the beginning of the year from the then prevailing market to the cost basis have not been takep as mcome but haye ij^eni credited directiy to SurpluSi Accouat^ The usual depreciation has Seen charged, that of metal producing plants being calculated on a unit of production basis. No depletion on metals, either on a cost or on the Treasury Department valuation basis, has been .charged ''lirir this ''li^iplnjfcfc: In our opinion the accompanying Balance Sheet and related statement of Income and Surplus fairly present on the basis outlined above the financial postcion of the company at 31st December, 1933 and the results of its operations'.fOrJ"thb yea*.;' We have also audited the jbooics and records of your principal a&iiated companies (Anaconda Wire and Cable Company, Silesian-Ameirican Corporation and Waiker Mining Company--not consolidated in these Accounts) anciaill their Su^idiirie* upon which we Report separately. PGGSON, PELOUBET & CO. Certified Public Accountants, New York, 15th March, 1934. U