Industrial-minerals junior
The Quebec City-based company has agreed to pay $40 million for a 50% interest in the mine and another $7 million for Teck’s share of Niobec’s working capital.
A first payment of $45 million is due upon closing of the transaction, expected in mid-February. The balance, bearing no interest, is payable three years after closing.
Mazarin President Jacques Bonneau says he’s “quite confident” Mazarin will raise the required financing, which will likely consist of bank loans, convertible debentures and equity placements.
Mazarin will assume Teck’s role as mine operator, while co-owner
“Niobec has been a profitable operation for Teck over some 20 years, and will continue to be a significant participant in the world niobium market,” commented Teck President Steven Dean in a statement. “Nevertheless . . . the sale of Niobec continues Teck’s policy [of focusing] its capital and management on its core assets.”
When it opened in 1976, Niobec produced niobium pentoxide (Nb2O5); nineteen years later, following the installation of a ferroniobium conversion plant, it began turning out higher-value ferroniobium.
This summer, Cambior and Teck completed a $7-million expansion of the concentrator at Niobec, boosting capacity by about 20%.
Today, the mine remains North America’s only producer of ferroniobium, ranking a distant third in size globally behind two large Brazilian open-pit mines.
For the three months ended Sept. 30, 2000, Niobec produced 523 tonnes niobium (in the form of ferroniobium), compared with 573 tonnes during the corresponding period last year. For the first nine months of 2000, Niobec produced 1,616 tonnes niobium, whereas 1,737 tonnes were produced in the comparable period of 1999.
Earlier in the year, Niobec’s niobium production targets for 2000 and 2001 were 2,352 tonnes and 2,826 tonnes, respectively.
At Dec. 31, 1999, total reserves at Niobec stood at 10.2 million tonnes grading 0.51% niobium, with the deposit remaining open at depth.
In a side deal, Mazarin has agreed to pay $3 million for Teck’s option on a 25% interest in
Teck acquired its option from Niocan in May by paying just $500,000 in cash and agreeing to pay another $500,000 upon receipt of key environmental permits (which have yet to be granted).
As part of that agreement, Niocan has a right of first refusal on the Teck-Mazarin deal, but the company has not publicly stated its intentions. A meeting between Niocan and Mazarin is scheduled for early December.
Ferroniobium is used as an alloying agent in high-strength and corrosion-resistant specialty-steel products. Over the past two years, niobium has been sold at about US$14.50 per kg of niobium in ferroniobium, which usually contains 65% niobium.
Mazarin remains involved in several industrial-minerals projects in Quebec. Through its subsidiary, AlumiCa, Mazarin produces a calcium-aluminate product known as Kwikflux, which is used in steel refining. Another Mazarin subsidiary, Dolomex, mines, processes and markets dolomite products and pelletized magnesium fertilizers. Mazarin also owns a large graphite deposit at Lac Knife, and is studying the feasibility of bringing the deposit into production in 2004.
For the six months ended Sept. 20, 2000, Mazarin recorded a net loss of $994,000 (3 per share) on revenue of $5.3 million, compared with a net loss of $540,000 (2 per share) on revenue of $4.3 million a year ago. Mazarin ended the period with $5.4 million in cash and short-term investments, and $11.4 million in long-term debt.
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