The Similco copper mine in northwestern British Columbia is being forced to close, though owner Princeton Mining (TSE) describes the shutdown as temporary.
The announcement came after Princeton was told by the province’s Job Protection Commission that it was unable to develop an economic plan for the open pit operation.
Princeton had hoped to defer certain operating costs, including half the mine’s electric bill and a portion of the yearly property taxes. But the commission recommended that the government not accept the deferral, given the price of copper and the prospect for recovery of the funds.
Chief Financial Officer Robert Watts confirmed that the company’s primary hurdle is the low price of copper.
The mine will be closed beginning Nov. 30.
Princeton is determined, however, to clean up its balance sheet. It has reached an agreement with debt-holders to convert $12 million in debentures and interest into an aggregate of about 22.9 million shares, raising to 58.8 million the total number of shares outstanding.
It is expected that, following the debenture conversion and the previously announced sale of Teranov Mining, long-term debt will be eliminated. However, the current working capital limits the degree to which Princeton can explore near Similco and on its ground in Chile, Watts said. The company is therefore reviewing various options, including raising more equity and seeking a joint-venture partner.
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