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Both copper and zinc recoveries should be lower in 2013, reflecting the increased proportions of metallurgically challenging ore types.
We expect to produce between 27,800 tonnes and 30,900 tonnes of copper and between 35,900 tonnes and 39,900 tonnes of zinc in 2013.
We expect operating costs in 2013 to be slightly higher than 2012 levels primarily due to increased manpower levels, increased electricity costs and increased mine department consumables.
Financial review
Lower copper sales volumes due to lower copper production volumes and timing of shipments this quarter
---------------------------------------------------------------------------- three months ended year ended(millions unless December 31 December 31 objectiveotherwise stated) 2012 2011 2012 2011 2013----------------------------------------------------------------------------Sales analysisCopper sales (tonnes) 5,100 6,900 33,200 27,500 29,400Zinc sales (tonnes) 10,000 9,900 40,000 50,000 37,900 ---------------------------------------------------Gross copper sales $36 $53 $258 $214 $233Gross zinc sales 19 19 77 101 84Other metal sales 4 5 24 27 17 ---------------------------------------------------Gross sales 59 77 359 342 334Smelter processing charges and freight (13) (14) (67) (69) (74)----------------------------------------------------------------------------Net sales $46 $63 $292 $273 $260----------------------------------------------------------------------------Cost analysisTonnes of ore milled (thousands) 319 316 1,218 1,195 1,250Direct production costs ($ per tonne) $81 $76 $77 $78 $81----------------------------------------------------------------------------Direct production costs $26 $24 $94 $93 $101Change in inventory (4) (3) 2 (1) -Depreciation and other non-cash costs 8 9 33 26 32----------------------------------------------------------------------------Operating costs $30 $28 $129 $118 $133----------------------------------------------------------------------------Operating earnings $16 $35 $163 $155 $127----------------------------------------------------------------------------Operating cash flow $64 $8 $170 $152 $120----------------------------------------------------------------------------
The objective for 2013 uses the assumptions listed on page 15.
The table below shows what contributed to the change in operating earnings and operating cash flow between 2012 and 2011.
---------------------------------------------------------------------------- three months ended Year ended(millions) December 31 December 31----------------------------------------------------------------------------Lower metal prices ($5) ($8)Higher (lower) copper sales volumes (11) 34Lower zinc sales volumes - (11)Higher smelter processing charges and freight - 1Higher operating costs (2) (1)Lower (higher) depreciation 1 (3)Other (2) (4)----------------------------------------------------------------------------Higher (lower) operating earnings, compared to 2011 (19) 8Change in tax expense because of foreign exchange changes in Cayeli's Turkish lira accounts 2 13Changes in working capital (see note 17 on page 52) 72 (8)Higher depreciation (1) 3Other 2 2----------------------------------------------------------------------------Higher operating cash flow, compared to 2011 $56 $18----------------------------------------------------------------------------
