Nanisivik mine profitable for MRI

Mineral Resources International reports net income of $4.5 million or 30 cents a share, for the nine months ended Dec 31, compared with a loss of $700,000, or 5 cents a share at the end of 1985.

The company notes that financial results for the current year now reflect its 100% ownership of Nanisivik Mines, as a result of its acquisition last November of the remaining 18% minority interest in Nanisivik, preceded by the buy-out of the original 35% royalty interest attached to the Nanisivik property.

Falling zinc prices were the primary cause of a third quarter loss of $1.6 million, MRI says. In September of last year the zinc price was $920(US) a tonne, which then fell in stages to $820 in January, at which time inventories were valued for the company’s third quarter financial statements.

In February, the price declined again to the current level of $790.

The price decline, says President John Lamacraft, affects zinc concentrate inventories held at the mine site as well as shipments made in the 1986 shipping season, which have not yet received final pricing.

He said that as of the end of February, 90% of the 1986 shipments will have had final settlement prices determined, and any further erosion in prices will not affect cash receipts to Nanisivik until the third quarter this year when a new shipping season starts.

Commenting on the zinc industry generally, Mr Lamacraft says in the western world it is currently operating at full capacity, resulting in a slight imbalance in supply and demand.

He notes that zinc consumption last year was the highest ever recorded, and expectations are that demand this year will also be good.

On the financial side, MRI hopes to raise $11.1 million through a rights offering, and that money, the MRI president said, will be applied to eliminate recent bank indebtedness of $10.4 million.

The terms of the offering provide that each share of MRI will receive one right, and shareholders may subscribe for additional shares on the basis of four rights plus a subscription price of $2.85 for each share subscribed for.

The offering expires Mar 12, and cannot be made to U.S. shareholders, for whom arrangements have been made to sell their rights in the market.