BALMAT A Montreal company plans to buy the Balmat zinc operation within three months with the intention of reopening it.
We think the market conditions are right. Its ready to be put back into production in short order, said Kevin D. Weston, president of Beaufield Resources. Its a perfect fit for us.
A restart date is not public yet, pending the completion of technical reports, but the company plans to start accepting resumes soon on its website, www.beaufield.com.
We plan to start recruitment within our 90-day due diligence period, Mr. Weston said. Our goal is to use as much local labor as we can.
If operations begin, employment will be similar to when HudBay Minerals operated the mine, he said.
About 200 people lost their jobs when HudBay closed the mines in 2008 because of rising operating costs and declining prices for zinc.
Beaufield has signed an exclusivity agreement and a non-binding letter of intent with HudBay to acquire the mine for a total of $12 million Canadian and up to $2 million Canadian in Beaufield shares. An earlier deal for OMT Inc. and New York Zinc, two other Canadian companies, to acquire the mine for $14 million is dead.
They werent able to raise the money, said John Vincic, HudBay vice president for investor relations and corporate communications.
OMT announced termination of the proposed business combination for acquisition of the Balmat mine Thursday.
HudBay will have no more than a 9.9 percent interest in Beaufield, a mineral exploration company whose activity has been focused in Quebec.
The deal between Beaufield and HudBay is for an initial payment at closing of $4 million Canadian, equity consideration of up to $2 million in common shares, a second cash payment due six months after closing of $4 million Canadian, and a third cash payment 12 months after closing of $4 million Canadian.
Beaufield intends to seek financing for part of the purchase payment and for the restart of the mine if it proves feasible. The company became aware of the availability of the Balmat operation in December and looked at the property in January, Mr. Weston said.
It all happened so quickly, he said.
Mr. Weston said he will introduce his technical team to the mines Monday and Tuesday. Exploration will continue under Beaufield, with good opportunities both within the Balmat mine and regionally, he said.
The reopening of the mine could come at a time when global zinc supplies are shrinking amid a number of mine closures. The current price for zinc is around 95 cents per pound, which could be sufficient for Balmat to be profitable.
Were optimistic it will be, Mr. Weston said.
The name of the operation will likely remain St. Lawrence Zinc.
Our company name will probably be on the sign as well, Mr. Weston said.
Fowler Supervisor Michael J. Cappellino was pleased to hear news that a sale was forthcoming.
That would be nice, he said. Id like to know more.