RIO ALGOM ANNOUNCES STRONG FIRST QUARTER RESULTS

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1 Rio Algom News Contact: Corey B. Copeland Vice-President Corporate Affairs FOR RELEASE: APRIL 20, 2000 RIO ALGOM ANNOUNCES STRONG FIRST QUARTER RESULTS Toronto, Ontario Rio Algom today announced net earnings of $15 million for the first quarter of 2000, up from $1 million for the same period in After deducting dividends on preferred securities and financing costs, earnings per common share were $0.16 compared to a loss of $0.09 a year earlier. Strong sales growth and higher metal prices drove the improvement. The company s average realized copper price was US$0.81 per pound versus US$0.66 per pound in the first quarter of Revenue was $570 million, up 12% from $511 million in the first quarter of 1999, while operating profit rose sharply to $45 million from $14 million a year ago. The company s operations generated $18 million of cash compared to $34 million a year earlier, as higher levels of working capital more than offset the favourable impact of increased net earnings. Pat James, President and Chief Executive Officer said: Our net earnings this quarter were the highest in over two years, supported by a strong operating performance and improving prices. We beat our targets for copper production and cash costs and our metals distribution business had one of its best quarters ever. Accomplishments in the first quarter of 2000 included: - Producing 116 million pounds of copper, up 9% from a year ago; - more 1 Rio Algom Limited 120 Adelaide Street West Toronto, Ontario Canada M5H 1W tel fax

2 Rio Algom News - Reducing average cash costs for copper to US$0.44 per pound, an 8% improvement from the first quarter of 1999; - Recording the best quarter in five years from metals distribution, where operating profit was $21 million, almost double the prior year s level; - Advancing Antamina on schedule and on budget, with engineering close to 90% complete and construction reaching the 30% mark; and, - Commencing work on the Spence feasibility study. Copper Mining (Rio Algom s copper mining operations include wholly owned Cerro Colorado in Chile, the company s 33.6% interest in Highland Valley Copper (HVC) in British Columbia and its 25% interest in the Alumbrera copper-gold mine in Argentina. As the company s investment in Alumbrera is accounted for using the equity method, Rio Algom records its share of Alumbrera s earnings or losses on its income statement, but does not include Alumbrera in revenue or operating profit.) Revenue from Cerro Colorado and the company s share of HVC was $89 million in the first quarter of 2000, up 22% from the same period a year ago. Higher copper prices and an 11% increase in sales at Cerro Colorado more than offset lower sales at HVC. Production at HVC exceeded sales by 11 million pounds as the mine restored inventories after resuming operations last fall. Operating profit from these operations was $18 million, up from $1 million a year earlier, reflecting higher revenue and a 11% reduction in the average cash cost to US$0.47 per pound. - more 2

3 Rio Algom News No equity earnings or losses were recorded from Rio Algom s 25% interest in Alumbrera, compared to equity earnings of $1 million in the first quarter of Rio Algom s share of production included 19 million pounds of copper and 31,000 ounces of gold compared to 28 million pounds and 46,000 ounces, respectively, a year ago. The reductions largely resulted from lower grades, poor weather conditions and maintenance work during the quarter. Cash operating costs, net of gold byproduct credits, were US$0.34 per pound compared to US$0.31 per pound a year earlier. Rio Algom s total copper production in the first quarter of 2000, including Alumbrera, was 116 million pounds compared to 106 million pounds a year ago, while cash costs averaged US$0.44 per pound, down from US$0.48 per pound in the first quarter of Other mining (Other mining comprises the company s US uranium operations (Rio Algom Mining Corp. or RAMC), a 25% royalty interest in the Polaris zinc-lead mine and the contribution from Rio Algom s 29.1% interest in the Bullmoose Coal mine.) Revenue from other mining in the first quarter of 2000 was $33 million, up from $27 million the previous year, largely reflecting higher uranium sales. Operating profit was $6 million compared to $2 million in the first quarter of 1999 with RAMC accounting for much of the increase. Rio Algom Metals Distribution (RAMD) Revenue in the first quarter of 2000 was $448 million, up $37 million or 9% from a year ago, reflecting higher sales volumes and prices for stainless steel and aluminum. The average selling price of stainless steel rose 15% from the first quarter of 1999, while sales volumes were 11% higher. Aluminum prices and volumes increased 2% and 6%, respectively. 3 - more

4 Rio Algom News Quarterly operating profit of $21 million was the highest since 1995, and was up from $11 million a year ago. RAMD s operating margin (operating profit as a percentage of revenue) increased to 4.7% from 2.7% in last year s first quarter. Return on capital employed was 19%, up from 8% during the first quarter of Cash Profile Cash and equivalents were $51 million at March 31, 2000 compared to $38 million at December 31, Cash flow from operations in the first quarter was $18 million compared to $34 million a year earlier mainly reflecting higher levels of working capital. Total capital expenditures were $83 million, of which $78 million or about 94% was funded by drawdowns from the Antamina project financing. Project expenditures will continue to be funded by the senior lenders until a debt level of approximately 60% is reached, after which funds will be contributed by the lenders and the project s owners on a pro-rata basis. Rio Algom does not anticipate making additional cash outlays for the project until the fourth quarter of this year. Dividend Rio Algom s Board of Directors approved a quarterly dividend of seven cents per common share payable on June 30, 2000 to shareholders of record at the close of business on June 9, more 4

5 CONSOLIDATED STATEMENTS OF EARNINGS (unaudited - in millions of Canadian dollars except per share data) Three Months Ended March 31, March 31, Revenue Mining $ 122 $ 100 Metals distribution Expenses Cost of mine production and metal sales Selling, general and administration Depreciation and amortization Interest 5 6 Exploration 6 4 Receivables securitization expense (2) Investment and other income 1 2 Earnings before taxes and equity in net earnings of associated company 26 - Income and mining taxes (note 1) (11) - Equity in net earnings of associated company - 1 Net earnings for the period $ 15 $ 1 Accretion of equity element of convertible debentures $ (3) $ (3) Dividends on preferred securities $ (3) $ (3) Income (loss) attributable to the common shareholders $ 9 $ (5) Net earnings (loss) per common share $ 0.16 $ (0.09) Weighted average shares outstanding (in millions) Note 1: Income taxes To comply with new Canadian accounting standards regarding income taxes, effective January 1, 2000 the company began to calculate income taxes using the liability method as opposed to the deferral method which was previously used. This new standard was adopted retroactively and as a result, opening retained earnings was reduced by $18 million. The comparative amounts for 1999 have not been restated. The effect of this change in Q was not material. Note 2: Employee Future Benefits To comply with new Canadian accounting standards regarding employee future benefits, effective January 1, 2000 the company began accruing all future employee benefit costs over the working lives of the employees. This new standard was adopted retroactively and as a result, opening retained earnings was reduced by $38 million. The comparative amounts for 1999 have not been restated. The effect of this change in Q was a reduction of $1.2 million pre-tax or $0.7 million after-tax and a reduction of $0.01 earnings per share. - more - 5

6 SEGMENT DISCLOSURES (unaudited - in millions of Canadian dollars) Corporate, Compania Minera Rio Algom Metals Development and Cerro Colorado Highland Valley Copper Distribution Other Mining Exploration Total Segmented Earnings For the Three Months Ended March 31, 2000 and 1999 Revenue Cost of operations Depreciation and amortization Segment profit (loss) (3) Corporate expenses (7) (6) (7) (6) Interest expense (5) (6) (5) (6) Exploration (6) (4) (6) (4) Receivables securitization expense (2) - (2) - Investment and other income (3) (19) (14) 26 - Equity in net earnings of associated company Earnings (loss) before taxes (3) (19) (13) 26 1 Segmented Balance Sheets As at March 31, 2000 and December 31, 1999 Total assets ,652 2,485 Segmented Cash Flow For the Three Months Ended March 31, 2000 and 1999 Operating activities (20) (33) (18) Capital expenditures (2) Geographic Data Canada USA Chile Argentina Peru Total Revenue Capital assets and goodwill ,878 1,796 - more - 6

7 SUMMARY OF KEY OPERATING STATISTICS Three Months Ended March 31, March 31, Copper Production (millions of pounds) (a) Cerro Colorado Highland Valley Copper Alumbrera (b) Average Copper Cash Cost (US$ per pound) Cerro Colorado Highland Valley Copper Alumbrera (b) Copper Sales (millions of pounds) (a) Cerro Colorado Highland Valley Copper Alumbrera (b) Average Copper Price (US$ per pound) Cerro Colorado Highland Valley Copper Alumbrera (b) Other Production (thousands) (a) Gold (ounces) (b) Molybdenum (pounds) Uranium (pounds) Coal (tonnes) (a) Rio Algom's share. (b) Not included in mining revenue or operating profit as the company's investment in Alumbrera is accounted for using the equity method. - more - 7

8 CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited - in millions of Canadian dollars) Three Months Ended March 31, March 31, CASH PROVIDED BY (USED IN) THE FOLLOWING: Operating Activities Net earnings for the period $ 15 $ 1 Non-cash items: Depreciation and amortization Future income taxes 7 (2) Equity in (net earnings) of associated company - (1) Other non-cash items (6) (1) Site restoration and related obligations (2) (3) Changes in non-cash working capital: (Increase) decrease in receivables and prepaid expenses and inventories (58) 33 Increase (decrease) in accounts payable and accrued liabilities 32 (20) Financing Activities Drawdown of senior project debt facilities 78 - Decrease in long term debt and other obligations (2) - Increase in short term borrowings 12 2 Interest on equity portion of convertible debentures (3) (3) Dividends on preferred securities (3) (3) Dividends on common shares (4) (4) 78 (8) Investing Activities Decrease in short term investments - 90 Capital expenditures (83) (89) (83) 1 Increase in cash and cash equivalents during period Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period (a) $ 51 $ 112 (a) Cash and cash equivalents also includes $25M (2000) and $11M (1999) held by partnerships and joint ventures. (b) Interest paid in 2000: $2M (1999: $3M). Income and mining taxes paid in 2000: $11M (1999: $6M). - more - 8

9 CONSOLIDATED BALANCE SHEETS (unaudited - in millions of Canadian dollars) March 31, December 31, Assets Current Cash and cash equivalents $ 51 $ 38 Receivables and prepaid expenses Inventories Property, plant and equipment Antamina project in process Mining properties Investment Other assets $ 2,652 $ 2,485 Liabilities Current Bank loans and overdrafts $ 36 $ 24 Accounts payable and accrued liabilities Current portion of liability element of convertible debentures Long term debt Post-employment benefit obligations (note 2) 84 - Liability element of convertible debentures Site restoration and related obligations Future income taxes (note 1) , Shareholders' equity Equity portion of convertible debentures Preferred securities Common shares Contributed surplus Cumulative translation adjustment Retained earnings (notes 1 and 2) ,620 1,658 $ 2,652 $ 2,485 - end - 9