Zinc miner Breakwater Resources (BWR-T) has announced that due to the continued depressed metal prices the Nanisivik mine, in Nunavut, will close in September 2002.
Lower zinc prices combined with an 18% decline in head grades and higher operating costs left Nanisivik with an $8.3-million operating loss in the first half of the year. Cash outflow during the period tallied to $6.1 million.
Based on weak zinc prices, and a grim outlook for prices in the early part of 2002, Breakwater has developed a new mining plan at Nanisivik, which focuses on the accelerated removal of the mine pillars. The new plan does not incorporate the mining of lower grade reserves and resources.
Breakwater also says that all of its operations are under review and the company plans on “pursuing all avenues of cash preservation, which may include the temporary suspension of operations at one or more other mines.”
During the first half of 2001, Breakwater racked up a loss of $9.5 million (or 8 per share). Revenue slid to $140.2 million. The loss includes $7.4 million recorded in the second quarter, when revenue topped a mere $59.4 million. By comparison, Breakwater earned $8.8 million (11 per share) on $146.4 million in the first half of 2000.
Since June, when the company became in default of its US$45-million revolving credit facility, Breakwater has deferred quarterly payments on a US$23.1-million term loan and was granted a one-month extension to the end of October by its bankers to raise $16 million.
Shares in the company have taken a beating this year and in afternoon on the Toronto Stock Exchange on Monday were trading down a penny at 18, a far cry from its all-time high in late 1997 of just more than $9 per share. The issue’s high-water mark set earlier this year was $1.82; its recently attained low point was 14.
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