Cyprus Amax Minerals Reports Record Low Copper Costs /

Cyprus Amax Minerals Company (NYSE: CYM) today reported a 1999 first quarter loss of $26 million or 33 cents per share, compared with 1998 earnings of $5 million, or break-even earnings per share. First quarter 1999 operating earnings were $31 million lower primarily because of reduced metal realizations -- 24 percent in copper and 19 percent in molybdenum -- and reduced coal and equity investment earnings, partially offset by substantially lower copper production costs and lower interest costs. Milton H. Ward, Chairman, President, and Chief Executive Officer stated, "Although the lower copper and molybdenum prices reduced revenue on produced sales by about $67 million from last year's first quarter, we were able to reduce costs by about $35 million. As a result, our copper and molybdenum operations were able to generate profits even with copper realizations only averaging 66 cents per pound and molybdenum realizations averaging $4.14 per pound in the quarter. Over the last two years, we have been able to reduce our copper cash costs by over 30 percent to our first quarter 1999 average of just 49 cents per pound, and we have continuous improvement ingrained in our organization." Ward added, "Our coal operations were able to reduce their total costs by about $7 million from last year's first quarter and corporate and interest expense were down by $13 million from last year's first quarter. Unfortunately, losses from our equity investments, Kinross Gold, Australian Coal and Amax Metals Recovery, were $10 million in the quarter versus break-even in last year's first quarter. Our Australian Coal operations continue to improve and would have reported first quarter profits except for the effects of an Australian dollar hedge book most of which will be closed out by the end of this year. We expect to be able to dissolve our equity investment in Amax Metals Recovery by the end of the year. Kinross Gold operations are continuing to improve and their losses are a direct result of today's low gold prices." Ward concluded, "The possible sale of our coal company is continuing on track. The Company, with its advisors, is currently clarifying and negotiating the terms of several proposals. Although there can be no assurance as to the timing or final terms of any transaction or whether ultimately any transaction will be completed, we expect to bring this process to conclusion by the end of the second quarter."

FIRST QUARTER HIGHLIGHTS (All comparisons are versus first quarter 1998 unless otherwise stated): (Segment income is earnings before corporate overhead, interest, equity and other, income taxes, and minority interest.) COPPER/MOLYBDENUM -- Copper/Molybdenum earned $7 million, $31 million less than in 1998. -- Copper realizations averaged 66 cents per pound, 21 cents lower than in 1998. -- The copper price protection program in 1998 favorably improved 1998 earnings by $21 million. There are no copper price protection programs in place for 1999 or future years. -- Copper production increased to 254 million pounds from 234 million pounds due to higher production from both the domestic and South American mines due to productivity improvements. -- Copper net cash costs were reduced to 49 cents per pound, even though the molybdenum by-product credit was 3 cents less per pound. Excluding the by-product credit, net cash costs were 11 cents per pound lower or 16 percent. This reflected lower costs at all operations and included record low smelting and refining costs. -- The smelter set records for smelter throughput, anode production and lowest smelting costs. Additionally, the refinery set a production record. -- Cost of goods sold dropped 11 cents to 64 cents per pound. -- Primary molybdenum earnings decreased from $10 million to $3 million primarily due to 94 cents per pound lower molybdenum realizations and lower sales volumes. COAL -- Coal earned $19 million, $6 million lower than 1998, excluding the 1998 first quarter earnings of $5 million from the sold coal properties. -- The continued recovery efforts resulting from the underground fire at the Willow Creek mine that occurred in late 1998 cost $6 million in the quarter. Limited continuous miner production resumed at Willow Creek in late March 1999 and the longwall is expected to be operational in the third quarter. The losses that have and are being incurred are expected to be partially offset by insurance recoveries. Insurance proceeds are reflected in income as claims are settled. -- Excluding the impact of the properties sold in the second quarter of 1998, production of 17 million tons was one million tons lower than 1998, and sales of 16 million tons were two million tons lower than 1998. -- Powder River Basin's lower production was a result of a decision to participate less heavily in the spot market and to utilize only our most efficient stripping equipment. -- The Twentymile, Cumberland and Shoshone mines continued their strong operating performance during the first quarter by reducing operating costs and enhancing productivity. -- The 1999 first quarter included one longwall move at Springvale and it is anticipated that three longwall moves will occur in the 1999 second quarter. EXPLORATION -- Exploration expense was $3 million, $7 million lower than in 1998, principally due to constraining exploration spending in 1999 in response to low copper prices. OTHER -- All Other Minerals reported a loss of $2 million compared to earnings of $8 million in 1998. The $10 million unfavorable variance is due to the absence of earnings from the Lithium and Amax Gold businesses that were sold or merged in 1998. -- Revenue of $449 million was $283 million lower than in 1998 due to lower copper, molybdenum and coal realizations and the absence of revenues due to the sales of eastern coal properties and lithium and the merger of Amax Gold in 1998. -- Equity Investments and Other incurred a loss of $10 million compared with break-even earnings in 1998. Oakbridge reported a loss of $5 million compared with break-even earnings in 1998. The loss is due to the effects of an Australian dollar hedge book, which should be mostly closed out by the end of 1999. Additionally, equity losses of $3 million and $2 million for Kinross and Amax Metals Recovery Inc., respectively, were included. Kinross' loss is attributable to the current low gold prices. -- Net interest expense of $31 million was $12 million less than 1998 reflecting the significant reduction in debt. -- Income taxes reflected a benefit of $4 million due to the loss during the period and that tax benefits are not recognized on foreign equity losses and exploration expenses. -- Since the Board approval in August 1998 of a program to buy back common shares on the open market, 1.5 million shares have been purchased through April 20, 1999 at an average cost of $10.74 per share or $16 million. No repurchases were made during the first quarter of 1999. Cyprus Amax Minerals Company, headquartered in Englewood, Colorado, is a leading producer of copper and coal, the world's largest producer of molybdenum, and holds a 30% interest in Kinross Gold Corporation. Cyprus Amax is exploring for minerals worldwide. Actual results may vary materially from any forward-looking statements the Company makes. Refer to the Cautionary Statement and Risk Factors contained in the Company's 1998 Form 10-K.

Cyprus Amax Minerals Company

Key Operating Data

Three Months Ended March 31

Three Months Ended

March 31,

1999 1998


Copper Sales Volume - Millions of Lbs. 304 273

Produced Copper Sold - Millions of Lbs. 286 243

Copper Production - Millions of Lbs. 254 234

Average Realization - $/Lb. of Copper .66 .87

Cost of Sales - $/Lb. .64 .75

Net Cash Cost - $/Lb. .49 .57

Full Cost - $/Lb. .62 .72

Molybdenum Sales - Millions of Lbs. 14 16

Molybdenum Production - Millions of Lbs. 16 15

Average Realization - $/Lb. 4.14 5.08


Sales - Millions of Tons (2) 16 18

Production - Millions of Tons (2) 17 18

Average Realization - $/Ton 11.25 11.87

Average Cost of Sales - $/Ton 10.24 10.67

Average Cash Cost - $/Ton 8.81 9.02

Average Unit Cost - $/Ton 9.98 10.83

(1) Restated in 1998 to exclude properties sold in the second quarter of


(2) Includes Oakbridge equity share.

Cyprus Amax Minerals Company

Consolidated Statement of Income

Three Months Ended March 31

(In Millions, Except Per Share Data)

Three Months Ended

March 31,

1999 1998

Revenue $449 $732

Costs and Expenses

Cost of Sales 345 534

Selling and Administrative Expenses 18 27

Depreciation, Depletion and Amortization 73 107

Exploration 3 10

Total Costs and Expenses 439 678

Income From Operations 10 54

Interest Income 4 4

Interest Expense (36) (48)

Capitalized Interest 1 1

Equity Investments and Other (10) --

Income (Loss) Before Income Taxes

and Minority Interest (31) 11

Income Tax Benefit (Provision) 4 (6)

Minority Interest 1 --

Net (Loss) Income (26) 5

Preferred Stock Dividends (5) (5)

Income (Loss) Applicable to Common Shares $(31) $--

Earnings (Loss) Per Common Share

Basic and Diluted $(.33) $--

Weighted Average Common Shares Outstanding

Basic 90.4 93.7

Diluted 100.1 103.3

Common Shares Outstanding at End of Period 90.5 93.7

Cyprus Amax Minerals Company

Financial Summary by Business Segment

Three Months Ended March 31

(In Millions)

Three Months Ended March 31,


Sales Revenue from Operations

1999 1998 1999 1998

Copper/Molybdenum $276 $335 $7 $38

Coal 172 303 19 30

Exploration -- -- (3) (10)

All Other Minerals 1 94 (2) 8

Total $449 $732 21 66

Corporate (11) (12)

Interest, Net (31) (43)

Equity and Other (10) --

Income (Loss) Before

Income Taxes

and Minority Interest (31) 11

Income Tax Benefit

(Provision) 4 (6)

Minority Interest 1 --

Net Income (Loss) $(26) $5

Cyprus Amax Minerals Company

Consolidated Balance Sheet

(In Millions)

March 31, December 31,

1999 1998


Cash and Cash Equivalents $273 $353

Accounts Receivable, Net 64 48

Note Receivable, Net 60 69

Inventories 381 386

Prepaid Expenses 43 52

Deferred Income Taxes 16 13

Total Current Assets 837 921

Properties - At Cost, Net 3,799 3,842

Equity Investments 337 345

Other Assets 218 233

Total Assets $5,191 $5,341


Short-Term Debt and Current Portion of

Long-Term Debt $138 $161

Other Current Liabilities 446 510

Long-Term Debt 1,678 1,677

Capital Lease Obligations 41 41

Deferred Employee and Retiree Benefits 349 345

Deferred Closure, Reclamation and

Environmental 280 300

Deferred Income Taxes 54 57

Other Noncurrent Liabilities and

Deferred Credits 55 59

Minority Interest 32 34

Total Shareholders' Equity 2,118 2,157

Total Liabilities and

Shareholders' Equity $5,191 $5,341

Cyprus Amax Minerals Company

Consolidated Statement of Cash Flows

Three Months Ended March 31

(In Millions)

Three Months Ended

March 31,

1999 1998

Operating Activities

Net Income (Loss) $(26) $5

Adjustments to Reconcile Net Income (Loss) to

Net Cash Provided by Operating Activities

Depreciation, Depletion, Amortization 73 107

Deferred Income Taxes (7) 2

Changes in Assets and Liabilities Net

of Effects

from Businesses Acquired/Sold (9) 16

Other, Net 8 8

Net Cash Provided by Operating Activities 39 138

Investing Activities

Capital Expenditures (73) (67)

Capitalized Interest (1) (1)

Advances and Investments, Net to Affiliates (3) (15)

Collections on Notes Receivable 1 1

Proceeds from Sale of Assets 3 1

Net Cash Used for Investing Activities (73) (81)

Financing Activities

Net Borrowings on Short Term Debt 6 17

Net Proceeds from Issuance of Long-Term Debt 3 3

Payments on Debt and Other Obligations (3) (17)

Payments on Capital Lease Obligations (30) (1)

Dividends to Minority Interests -- (3)

Dividends Paid (22) (23)

Net Cash Used for Financing Activities (46) (24)

Net Increase (Decrease) in Cash and Cash

Equivalents (80) 33

Cash and Cash Equivalents at Beginning of Year 353 250

Cash and Cash Equivalents at End of Period $273 $283 ots Original Text Service: Cyprus Amax Minerals Company Internet: Contact: Gerald J. Malys, Senior Vice President & Chief Financial Officer, 303-643-5060, John Taraba, Vice President & Controller, 303-643-5244, or Mike Rounds, 303-643-5186, all of Cyprus Amax Minerals Company Company News On-Call: or fax, 800-758-5804, ext. 224250 Web site:


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