Breakwater Resources acquires two zinc mines

Breakwater Resources (BWR-T) is adding to its portfolio two zinc operations — one in Tunisia and the other in Chile.

For a purchase price of US$19.3 million, the company will acquire Societe Miniere de Bougrine, which owns the mothballed Bougrine zinc-lead operation in Tunisia.

The mine has proven and probable reserves of 2.8 million tonnes grading 12.2% zinc and 2.4% lead — sufficient for seven years at an annual production rate of 400,000 tonnes.

The operation, which was constructed at a cost of US$80 million, began production in June 1994. However, a drop in the price of zinc forced a closure in October 1996. During its brief life span, the mill processed 693,663 tonnes averaging 13.7% zinc and 2.5% lead. In 1996, average recovery rates for zinc and lead were 83.7% and 72.6%, respectively.

Breakwater intends to upgrade the underground mine at an estimated cost of US$7 million, thereby allowing for annual production of 400,000 tonnes, beginning in early 1998. The operation is expected to produce 42,000 tonnes of zinc and 4,000 tonnes of lead in concentrate per year.

Societe Miniere de Bougrine is owned 48% by Inmet Mining (IMN-T).

Chilean asset

Breakwater has also agreed to buy the Toqui zinc-gold operation in Chile, which Barrick Gold (ABX-T) will relinquish for US$6 million and a net smelter return royalty.

Situated south of Santiago, El Toqui is a 1,200 sq.-km-property which includes the producing Dona Rosa zinc mine, the formerly producing San Antonio and Mallin-Monica zinc mines, a 1,100-Tonne-per-day concentrating plant and a hydroelectric plant.

Minable reserves at the Dona Rosa are estimated at 1.7 million tonnes grading 8.8% zinc and 1.5 grams gold. Also, the three mines are believed to hold resources totalling a further 1 million tonnes of 7.5-8% zinc.

Limited drilling has revealed several targets in the vicinity of the two mines.

The mill at Dona Rosa can treat 400,000 tonnes per year. In 1996, it treated 367,149 tonnes averaging 10.3% zinc and 1.15 grams gold. Production amounted to 32,423 tonnnes of zinc in concentrate and 6,250 oz. gold. Recoveries for zinc and gold were 86% and 45.9%, respectively.

The acquisition of Bougrine and Toqui will increase Breakwater’s proven and probable zinc reserves by about 50%.

The company already owns and operates three active zinc mines: Nanisivik, in the Northwest Territories; El Mochito, in Honduras; and Caribou, in New Brunswick.