Falconbridge 6-K Form 6K Q2 Report

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EXHIBIT 99.1

NORANDA INC.

CONSOLIDATED STATEMENT OF EARNINGS

(US$ millions)

		Second Quarter						Six Months ended June 30
		2004			2003			2004			2003
Revenues		$	1,694		$	1,112		$	3,347		$	2,168
Operating expenses
	Cost of operations		539			502			1,006			971
	Purchased raw materials		749			421			1,460			835
	Depreciation, amortization and accretion		126			127			243			241
			1,414			1,050			2,709			2,047
Income generated by operating assets			280			62			638			121
Interest expense, net			36			36			61			74
Corporate and general administration			15			14			28			27
Research, development and exploration			12			12			19			20
Minority interest in earnings of subsidiaries			64			18			143			34
Income (loss) before undernoted			153			(18	)		387			(34	)
Tax expense (recovery)			58			(23	)		144			(29	)
Restructuring costs			—			11			—			41
Other expenses (income)			(12	)		4			(17	)		4
Net income (loss)		$	107		$	(10	)	$	260		$	(50	)
Dividends on preferred shares			5			9			10			12
Interest on convertible debentures			1			1			2			2
Net income (loss) attributable to common shares		$	101		$	(20	)	$	248		$	(64	)
Basic earnings (loss) per common share — $		$	0.34		$	(0.08	)	$	0.84		$	(0.26	)
Diluted earnings (loss) per common share — $		$	0.34		$	(0.08	)	$	0.83		$	(0.26	)
Basic weighted average shares outstanding — 000s			296,249			243,080			295,922			242,302
Diluted weighted average shares outstanding — 000s			303,965			243,412			303,543			242,634

Note:

Effective July 1, 2003, Noranda adopted the US dollar as its reporting and functional currency. This change has been reflected on a retroactive basis.

1

NORANDA INC.

CONSOLIDATED BALANCE SHEETS

(US$ millions)

		Actual
		Jun. 30 2004		Dec. 31 2003
Assets
Current assets
	Cash and cash equivalents	$	628	$	501
	Short-term investments		—		129
	Accounts receivable		741		576
	Metals and other inventories		1,254		1,179
			2,623		2,385
Operating capital assets			4,873		4,765
Development projects			891		973
Investments and other assets			298		205
		$	8,685	$	8,328
Liabilities and Equity
Current liabilities
	Accounts and taxes payable	$	1,010	$	903
	Debt due within one year		174		431
			1,184		1,334
Long-term debt			2,940		2,893
Future income taxes			101		46
Reclamation, pension and other provisions			602		539
Stockholders' interest:
	Interests of other shareholders		1,056		919
	Shareholders' equity		2,802		2,597
		$	8,685	$	8,328

2

NORANDA INC.

CONSOLIDATED STATEMENTS OF CASHFLOWS

(US$ millions)

			Second Quarter						Six Months ended June 30
			2004			2003			2004			2003
Cash realized from (used for):
Operations
	Net income (loss)		$	107		$	(10	)	$	260		$	(50	)
Charges (credits) not affecting cash:
	Depreciation, amortization and accretion			121			118			227			223
	Minority interests in earnings of subsidiaries			64			19			143			35
	Foreign exchange, restructuring and other			3			57			15			85
				295			184			645			293
Net change in accounts receivable, inventories and payables				(40	)		(47	)		(128	)		(150	)
Cash from operations				255			137			517			143
Investment activities
	Capital investments			(146	)		(112	)		(270	)		(213	)
	Investments and advances			118			—			128			—
	Proceeds on dispositions			1			10			3			11
Cash used in investment activities				(27	)		(102	)		(139	)		(202	)
Financing activities
	Long-term debt, including current portion
		Issued		113			388			141			447
		Repaid		(300	)		(344	)		(344	)		(398	)
	Issue of shares — common			5			—			18			—
	Issue of preferred shares			—			100			—			198
	Dividends paid			(40	)		(38	)		(80	)		(67	)
	Issue (repurchase) of shares — minority shareholders			3			(5	)		14			(5	)
				(219	)		101			(251	)		175
Increase in cash and cash equivalents				9			136			127			116
Cash and cash equivalents, beginning of period				619			273			501			293
Cash and cash equivalents, end of period			$	628		$	409		$	628		$	409

3

NORANDA INC.

PRODUCTION VOLUMES

						Six Months ended June 30
				Second Quarter
Mine Production (tonnes, except as noted)			100% basis, except as noted
				2004	2003	2004	2003
Copper
	Copper business
		Kidd Creek		14,292	10,655	23,588	21,373
		Antamina	(33.75%)	30,976	21,942	56,533	46,399
		Collahuasi	(44%)	46,433	43,515	81,802	87,726
		Lomas Bayas		14,914	14,809	30,642	29,381
				106,615	90,921	192,565	184,879
	Matagami			2,024	1,928	3,880	3,931
	Brunswick			1,357	2,193	3,199	4,579
	INO			9,081	10,885	14,617	19,946
	Other			2,943	3,245	7,373	9,734
				122,020	109,172	221,634	223,069
Zinc
	Zinc business
		Brunswick		62,280	73,942	135,860	144,740
		Matagami		31,771	25,113	58,445	50,397
				94,051	99,055	194,305	195,137
	Kidd Creek			10,700	16,479	31,492	37,651
	Antamina		(33.75%)	18,309	33,592	40,778	57,760
	Other			2,847	2,120	4,391	4,092
				125,907	151,246	270,966	294,640
Nickel				11,957	13,754	23,029	26,715
Ferronickel				6,871	6,557	14,870	13,444
Lead				17,138	19,911	37,425	38,336
Silver — 000 ounces
	Copper business
		Kidd Creek		757	548	1,951	1,287
		Antamina	(33.75%)	736	575	1,389	1,260
				1,493	1,123	3,340	2,547
	Brunswick			1,363	1,543	2,965	3,025
	Matagami			119	89	233	186
	Other			73	61	123	130
				3,048	2,816	6,661	5,888
Metal Production (tonnes, except as noted)
Refined copper
	Copper business
		CCR		68,288	46,444	146,448	89,470
		Kidd Creek		19,531	38,024	53,253	74,983
		Collahuasi	(44%)	5,669	6,583	11,821	13,445
		Lomas Bayas		14,914	14,809	30,642	29,381
				108,402	105,860	242,164	207,279
	Nikkelverk			9,234	8,843	18,980	17,378
				117,636	114,703	261,144	224,657
Copper anodes
	Horne			41,199	22,054	84,433	50,321
	Kidd Creek			19,656	36,276	51,177	73,044
	Altonorte			67,242	67,917	131,092	109,010
				128,097	126,247	266,702	232,375
Refined zinc
	Kidd Creek			35,918	30,966	64,376	68,901
Refined nickel
	Nikkelverk			16,099	20,140	34,958	40,703
	Falcondo			6,871	6,557	14,870	13,444
				22,970	26,697	49,828	54,147
Primary aluminum				61,642	61,178	122,862	122,304
Fabricated aluminum				45,796	36,660	88,184	73,585
Refined lead				28,240	23,322	53,388	47,788
Refined gold — 000 ounces				266	293	535	563
Refined silver — 000 ounces				10,236	7,028	20,359	15,696

NORANDA INC.

SALES VOLUMES & REALIZED PRICES

						Six Months ended June 30
				Second Quarter
Metal Sales (tonnes, except as noted)			100% basis, except as noted
				2004	2003	2004	2003
Copper
	Copper business
		CCR		65,686	48,608	150,672	95,762
		Kidd Creek		13,930	21,522	36,720	50,240
		Horne — (concentrates)		11,338	5,643	15,190	7,905
		Antamina — (concentrates)	(33.75%)	18,500	18,656	35,951	40,111
		Collahuasi — (concentrates)	(44%)	30,390	30,594	49,365	60,471
		Collahuasi	(44%)	11,114	9,250	17,028	17,765
		Lomas Bayas		13,645	14,817	28,681	29,395
		Altonorte — (anodes)		43,567	33,308	98,664	62,969
				208,170	182,398	432,271	364,618
	Nikkelverk			11,464	16,139	24,661	30,609
				219,634	198,537	456,932	395,227
Zinc
	Copper business
		Kidd Creek		33,675	28,361	60,200	63,878
		Antamina — (concentrates)	(33.75%)	19,931	31,033	34,150	46,433
				53,606	59,394	94,350	110,311
Zinc business
	Brunswick/Matagami — (concentrates)			70,997	86,104	145,131	164,131
				124,603	145,498	239,481	274,442
Nickel				18,025	20,562	36,143	40,952
Ferronickel				7,808	6,455	14,585	12,991
Aluminum
	Primary aluminum — shipments			65,680	63,528	126,425	123,380
	Norandal — shipments			45,796	36,660	88,184	73,585
Lead				29,263	26,446	50,474	44,915
Gold — 000 ounces				225	213	461	449
Silver — 000 ounces
	CCR			10,193	6,308	19,519	15,390
	Kidd Creek			1,143	1,553	2,147	2,757
	Antamina		(33.75%)	655	435	1,078	1,010
				11,991	8,296	22,744	19,157
Average Realized Prices — ($U.S. per pound, except as noted)
	Copper			1.27	0.75	1.21	0.76
	Nickel			5.76	3.87	6.32	3.85
	Ferronickel			5.85	3.78	6.29	3.71
	Zinc			0.51	0.40	0.52	0.40
	Aluminum			0.81	0.67	0.81	0.67
	Lead			0.40	0.24	0.41	0.24
	Gold — (US$ per ounce)			394.71	344.27	399.24	350.58
	Silver — (US$ per ounce)			6.41	4.58	6.37	4.70
Exchange Rate (US$ = Cdn$)				0.74	0.71	0.75	0.69

NORANDA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Millions of US dollars, except as otherwise indicated)
(Unaudited)

1.    Accounting Policies

These unaudited interim consolidated financial statements have been prepared using disclosure standards appropriate for interim financial statements and do not contain all the explanatory notes, descriptions of accounting policies or other disclosures required by Canadian generally accepted accounting principles for annual financial statements. Such notes, descriptions of accounting policies and other disclosures have been included in the Company's 2003 annual consolidated financial statements except as discussed in Note 2 below. Accordingly, these unaudited interim financial statements should be read in conjunction with the Company's audited annual consolidated financial statements and the accompanying notes included in the 2003 Annual Report.

2.    Change in Accounting Standards

Effective January 1, 2004, Noranda adopted the new Canadian Institute of Chartered Accountants (CICA) standards for Asset Retirement Obligations (CICA 3110) and Hedging Relationships (AcG13).

a)

Asset Retirement Obligations 

Previously, Noranda expensed costs related to ongoing site restoration programs when incurred, while a provision for future site reclamation and closure costs was charged to earnings over the life of the operations. In accordance with CICA 3110, asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The amount of the liability is subject to re-measurement at each reporting period. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value and amortized over the estimated life of the mine. The key assumptions on which the fair value of the asset retirement obligations is based includes the estimated future cash flows, the timing of those cash flows and the credit-adjusted risk-free rate or rates on which the estimated cash flows have been discounted. Cash outflows totaling $1,374 are expected to be incurred over a period extending 62 years beyond 2004. These cash outflows are discounted using a rate ranging from 5 to 8%. This change in accounting policy was applied retroactively and, accordingly, the consolidated financial statements of prior periods were restated.

As a result of this change, the cumulative impact from the adoption of this standard at January 1, 2003 was to decrease retained earnings by $27, increase capital assets by $70, increase the provision for asset retirement by $97, decrease future income taxes by $5 and increase interest of other shareholders by $5. Adoption of the new standard reduced earnings by $1 for the three and six months ended June 30, 2003 and reduced net income by $11 for the year ended December 31, 2003.

The asset retirement obligation for the three and six months ended June 30, 2004 decreased by $5 and $10 respectively (2003 — increased by $29 and $53 respectively).

		Three months						Six months
Periods ending June 30,
		2004			2003			2004			2003
Asset retirement obligation beginning of period		$	(407	)	$	(358	)	$	(412	)	$	(334	)
	Liabilities incurred		—			(3	)		—			(5	)
	Liabilities settled		5			5			10			9
	Accretion expense		(7	)		(6	)		(14	)		(13	)
	Foreign exchange and other		7			(25	)		14			(44	)
Asset retirement obligation end of period		$	(402	)	$	(387	)	$	(402	)	$	(387	)

b)

Hedging Relationships 

As of January 1, 2004, Noranda adopted the recommendations of AcG 13 which provide for more restrictive conditions as to when hedge accounting may be used. On implementation of this standard at January 1, 2004, the Company's partially-owned subsidiary, Falconbridge, recorded a deferred mark-to-market gain of $27 on its interest rate hedges while recording a long-term receivable and long-term payable of $68 and $40, for those contracts in a gain and loss position, respectively. Amortization of $3 and $6 of this deferred gain was amortized into income during the three and six months ended June 30, 2004. Since the interest rate hedge contracts were not eligible for hedge accounting, the net interest received/paid on these positions are shown as a component of other income.

During the three and six months ended June 30, 2004, Falconbridge recorded a mark-to-market loss of $13 and $nil respectively, for those contracts which were not eligible for hedge accounting. In addition, Noranda recorded a mark-to-market gain of $5 and $nil during the three and six months ended June 30, 2004 on its commodity contracts. The mar-to-market position on these commodity contracts at June 30, 2004 was negligible.

Under the provisions of the new standard, Noranda continued to be eligible for hedge accounting on its fixed forward price hedges and on its forward and option contracts used as a currency hedge of Canadian dollars operating costs. Falconbridge did not seek hedge accounting for its contracts used as an economic currency hedge of Canadian dollar monetary assets and liabilities and accordingly continues to mark these to market.

3.    Stock-Based Compensation

During the first quarter, the Company granted 860,500 stock options at a price of CDN$20.37 per share. These options have a 10-year term, vesting 20% per year over the first five years. The compensation expense associated with this stock option series was calculated using the Black-Scholes valuation model, assuming a 8-year term, 25% volatility, a weighted- average expected dividend of 1.87% annually and an interest rate of 4.32%, and is being charged against net income over its vesting period.

No new stock options were granted by the Company during the three months ended June 30, 2004.

Corporate and general administration, for the three and six months ended June 30, 2004, include compensation costs of $1 and $2 respectively, relating to outstanding options.

4.    Exchange Gains and Losses on Foreign-denominated Expenditures

The majority of Noranda's products are denominated in US dollars or indexed to US dollar prices. In addition, operating costs of Noranda's assets are also denominated in their local currency and exposed to exchange volatility. Prior to July 1, 2003, at which point Noranda changed its functional currency to the US dollar, Noranda managed its US dollar revenue exposure by utilizing spot and forward foreign exchange contracts with its banks as counter-parties. Subsequent to the change, Noranda started hedging its Canadian dollar costs using foreign currency exchange contracts.

Noranda's operating costs for the three and six months ended June 30, 2004 include realized exchange gains from the settlement of various cost hedge contracts of $14 and $39 (2003 — revenues include realized exchange gains on revenue hedge contracts of $2 and $3 respectively).

Other foreign currency exchange contracts, relating to foreign currency expenditures and other foreign currency denominated monetary assets and liabilities, generated a gain of $nil and $5 for the three and six months ended June 30, 2004 (2003 — loss of $4 and $5 respectively) at the Company's partially-owned subsidiary.

5.    Shareholders' Equity

					June 30, 2004				December 31, 2004
					Shares (000)	Amount			Shares (000)		Amount
Share capital
	Authorized — an unlimited number of: Preferred, Common and Participating shares
	Issued: —
		Common Shares
			Balance Shares		295,228		2,084		241,289			1,595
				Issue of common shares	—		—		48,520			431
				Issued on exercise of stock options	1,426		19		373			6
				Issued under dividend re-investment	20		—		5,046			52
				Issued under share purchase plan	—		—		—			—
			Balance, end of period		296,674	$	2,103		295,228		$	2,084
		Preferred Shares, Series F
			Balance beginning of year and end of period		3,246		59		3,246			59
		Preferred Shares, Series G
			Balance beginning of year and end of period		8,754		137		8,754			137
		Preferred Shares, Series H
			Balance beginning of year		6,000		99		—			—
				Issued	—		—		6,000			99
			Balance, end of period		6,000		99		6,000			99
		Preferred Shares, Series I
			Balance beginning of year		—		—		—			—
				Issued	—		—		6,000			100
				Redeemed	—		—		(6,000	)		(100	)
			Balance end of period		—		—		—			—
Contributed Surplus — stock option valuation					—		3		—			3
Convertible Debentures							86					84
Basic weighted average number of shares — 000's							295,822					261,618
Diluted weighted average number of shares — 000's							303,543					262,107
Retained Earnings (deficit):
	Balance beginning of year					$	(92	)			$	24
		Change in accounting policy:
		Asset retirement obligation					(38	)				(27	)
						$	(130	)			$	(3	)
		Net income					260					23
		Dividends:    Common					(53	)				(121	)
		Preferred					(10	)				(21	)
		Other					(1	)				(8	)
		Balance end of period					66					(130	)
Currency Translation and other at end of period							249					261
Total Shareholders' Equity						$	2,802				$	2,597

6.    Segmented Information

Noranda has four operating segments: Copper, Nickel, Zinc and Aluminum. Inter-segment sales and purchases are made at market prices and trade terms. Operating results and identifiable assets are presented below:

	Second Quarter 2004
	Copper		Nickel	Zinc	Aluminum	Other		Total
Revenues	$	853	438	110	241	54		$	1,894
Operating expenses
Cost of operations		187	158	48	110	38			539
Purchase of raw materials		474	111	37	97	30			749
Depreciation, amortization and accretion		60	31	15	10	10			126
	$	721	300	100	217	78			1,414
Income (loss) generated by operating assets	$	132	136	10	24	(22	)	$	280
Interest expense, net									(38	)
Corporate and general administration									(15	)
Research, development and exploration									(12	)
Minority interest in earnings of subsidiaries									(84	)
Income before undernoted									153
Tax expense									(56	)
Other income									12
Net income								$	107
Capital investments	$	72	63	—	5	6		$	145

	Second Quarter 2003
	Copper		Nickel	Zinc		Aluminum	Other		Total
Revenues	$	494	306	89		171	52		$	1,112
Operating expenses
Cost of operations		154	167	61		96	24			502
Purchase of raw materials		250	49	40		58	24			421
Depreciation, amortization and accretion		51	38	16		10	12			127
	$	455	254	117		184	60		$	1,050
Income (loss) generated by operating assets	$	39	52	(28	)	7	(8	)	$	62
Interest expense, net										(38	)
Corporate and general administration										(14	)
Research, development and exploration										(12	)
Minority interest in earnings of subsidiaries										(18	)
Loss before undernoted									$	16
Tax recovery										23
Restructuring costs										(11	)
Other expense										(4	)
Net loss									$	(10	)
Capital investments	$	68	30	—		5	2		$	112

		Six Months ended June 30, 2004
		Copper		Nickel	Zinc	Aluminum	Other	��	Total
Revenues		$	1,897	917	195	445	93		$	3,347
Operating expenses
	Cost of operations		382	298	82	213	31			1,006
	Purchase of raw materials		936	233	58	173	50			1,480
	Depreciation, amortization and accretion		109	63	33	19	20			243
		$	1,426	594	183	406	101		$	2,708
Income (loss) generated by operating assets		$	271	323	12	40	(8	)	$	636
Interest expense, net										(61	)
Corporate and general administration										(28	)
Research, development and exploration										(18	)
Minority interest in earnings of subsidiaries										(143	)
Income before undernoted										387
Tax expense										(144	)
Other income										17
Net income									$	260
Total assets, excluding cash, cash equivalents		$	4,210	1,802	426	837	782		$	8,057
Capital investments		$	146	97	1	11	15		$	270

		Six Months ended June 30, 2003
		Copper		Nickel	Zinc		Aluminum	Other		Total
Revenues		$	985	590	176		342	95		$	2,169
Operating expenses
	Cost of operations		320	310	113		188	42			971
	Purchase of raw materials		479	111	83		118	44			835
	Depreciation, amortization and accretion		103	67	29		21	21			241
		$	902	486	225		325	107		$	2,047
Income (loss) generated by operating assets		$	53	102	(49	)	17	(12	)	$	121
Interest expense, net											(74	)
Corporate and general administration											(27	)
Research, development and exploration											(20	)
Minority interest in earnings of subsidiaries											(34	)
Loss before undernoted											(34	)
Tax recovery											29
Restructuring costs											(41	)
Other expenses											(4	)
Net loss										$	(50	)
Total assets, excluding cash, cash equivalents		$	3,937	1,633	512		801	66		$	7,548
Capital investments		$	134	42	—		10	27		$	213

7.    Post — employment benefits

Post-employment benefit expenses for the three and six months ended June 30, 2004 and 2003 are summarized as follows:

	Three months		Six months
	2004	2003	2004	2003
Defined benefit pension plan	15	15	27	31
Defined contribution pension plan	3	2	5	5
Other benefit plans	6	6	12	11
	24	23	44	47

8.    Comparative Figures

The comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the 2004 consolidated statements.

QuickLinks

EXHIBIT 99.1

NORANDA INC. CONSOLIDATED STATEMENT OF EARNINGS (US$ millions)
NORANDA INC. CONSOLIDATED BALANCE SHEETS (US$ millions)
NORANDA INC. CONSOLIDATED STATEMENTS OF CASHFLOWS (US$ millions)
NORANDA INC. PRODUCTION VOLUMES
NORANDA INC. SALES VOLUMES & REALIZED PRICES
NORANDA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Millions of US dollars, except as otherwise indicated) (Unaudited)