* Q1 results up over 1,600 pct on Asarco, metals prices
* Plans to invest $10 million in Asarco exploration plan
* Upbeat on Cananea even as striking workers block mine
(Rewrites throughout with dollar results)
By Mica Rosenberg
MEXICO CITY, April 30 Copper miner Grupo Mexico
posted a huge jump in first quarter net profit on Friday,
rising more than 16 times compared with the same quarter last
year, on the incorporation of U.S.-based company Asarco and
better metals prices.
Net profit was $348 million in the January to March period
compared to just $19.8 million in 2009. Sales jumped 127
percent to 1.933 billion compared to $851 million a year ago.
Earnings before interest, tax, depreciation, and
amortization, or EBITDA, doubled to $920 million, the company
said in an emailed statement.
Metals prices, which have recovered from the deep falls at
the start of the global financial crisis, gave a boost to the
quarter's results. Copper prices were up 8.8 percent,
molybdenum jumped 39.8 percent and zinc rose 3.4 on average in
the quarter compared with the first quarter 2009.
The results were helped after Grupo Mexico won back control
of Asarco, which mines copper in Arizona, last December.
Asarco, a former subsidiary of Grupo Mexico, fell into
bankruptcy under the heavy burden of environmental claims.
Grupo Mexico won a bidding war with India's Sterlite
Industries Ltd STRL.BO after a drawn-out court battle and now
sees positive results for Asarco next year.
"A budget of over US$10 million was approved in 2010 to
develop an exploration and drilling project ... This program is
expected to increase significantly Asarco's reserves," the
Asarco produced 49,608 tonnes of copper and 525,054 ounces
of silver in the quarter.
UPBEAT ON CANANEA
The company's largest copper mine in Cananea has been shut
for nearly three years due to a strike, but a Mexican court
ruled earlier this year that Grupo Mexico could fire the
workers and reopen the mine.
The union, which controls the installations, says it will
not give up the mine and its members are blocking the entrance,
complicating Grupo Mexico's $3.8 billion expansion plan at
Cananea that would increase copper production there to 460,000
tonnes a year. [ID:nN18198161]
But Grupo Mexico painted a rosier picture in its report.
"The company is confident that the required legal/labor
conditions will soon be in place as the law is enforced to
permit the reopening of the mine."
In March, Grupo Mexico closed down a copper smelter in the
central state of San Luis Potosi, which had been in operation
for almost 100 years, but the closure will not affect smelting
capacity as processing is ramped up at other facilities.
Grupo Mexico, which also operates mines in Peru and
railroads in Mexico, reported its earnings to the Mexican stock
exchange in Mexican pesos, saying first quarter net profit was
4.482 billion pesos, which converts to $362 million at the
12.387 pesos exchange rate at the end of March.
In peso terms, the company said first-quarter revenues were
24.775 billion pesos compared with 12.508 billion pesos last
On April 23, the board of directors announced a 0.17 peso
per share dividend to be paid on May 17.
(Reporting Mica Rosenberg and Jason Lange; editing by Andre