The Superior Oil Company, which considered joining other oil companies that are buying up copper mines, has decided against a takeover of the Hecla Mining Company's copper operations in Arizona.
Superior decided against the acquisition, proposed last March, after studying the financial condition of Hecla, which has been crippled by low world wide copper prices and operating problems at its Lakeshore Mine on the Papago Indian Reservation near Casa Grande, Ariz.
The decision leaves Hecla with about $500,000 a month in continuing losses at the mine and a $6.8 million loan payment due on July 1 to its creditors. William J. Grismer, Hecla's vice president for finance, said yesterday the company is hoping to get an extension on the payment and that longer term relief lies in ridding the company of the Lakeshore facility.
"It could be assumed it would not be a good investment," Allan C. Durham, Superior's senior vice president said of the decision. Superior is a $545 million a year oil and gas exploration and production company based here.
The decision counters a trend among oil companies to pick up copper mines at fire sale prices during today's of losses in expectation of substantially higher copper prices in years to come. Oil companies have bought outright or acquired an interest in five of the largest domestic copper companies and they control, by one estimate, 40 per cent of the nation's domestic copper industry.
The $200 million Lakeshore mine has been closed since Aug. 29 with some 1500 workers thrown out of their jobs. One of two mines at the Lakeshore facility has never reached its full production capacity, and worldwide copper prices are now at about 65 cents a pound - well below the 70-plus cents needed to break even.
Hecla entered into the mining operation with El Paso Natural Gas in 1949; last year the mining operation lost $23.8 million.
While El Paso has remained profitable despite the copper losses, Hecla's profits from lead and silver mining in Northern Idaho have been overwhelmed by the copper loses. Last Year Hecla lost $13.6 million on operating revenue of $48.5 million - with virtually all of the loss attributable to Lakeshore.
Grismer said the 1976 and 1977 losses for Hecla were the first since the Great Depression for the company, which was founded in 1898. The company is based in Wallace, Idaho.
Superior's proposal put forth last March would have involved $26 million for about 35 per cent of Hecla. Most importantly, Superior would have completely assumed Hecla's operating interest in Lakeshore.
In April, Hecla negotiated with its creditor banks an increase in its line of credit to $56.3 million and to defer its first payment until July 1, which it is now trying to postpone.