Audrey Resources (TSE) has shut down its Mobrun polymetallic mine near Rouyn-Noranda, Que., and laid off 115 workers after exhausting ore in the Main lens and three smaller deposits.
A company spokesman said the move will allow Audrey to conserve about $2 million in cash while it negotiates to raise $45 million for development of Mobrun’s new 1100 massive sulphide lens.
Caroline Huynh, vice-president of investor relations, says Audrey has obtained a verbal agreement from Elders Finance Inc. allowing it to postpone until June payments on $12.1 million of debt. The company is now asking Elders to extend the loan until June, 1994.
Huynh says a recent drop in the price of Audrey’s shares to a low of 90 cents compared to the 52-week high of $4.50 is making it difficult for the Quebec company to sort out its financial problems.
However, she is encouraged that President Guy Hebert is once again talking with Royal Dutch-Shell subsidiary Billiton Metals Canada and some other international companies about selling Audrey’s interest in the Mobrun project. While Toronto-based Minnova (TSE) recently exercised an option to earn a 50% stake in the portion of the 1100 lens that lies below the mine’s 4850 level, the Noranda affiliate isn’t involved in those discussions.
Subject to a 4% net smelter royalty to Minnova, Audrey owns 100% of reserves in the upper portion of the 1100 which hosts 15.5 million tonnes of grade 4.64% zinc, 0.83% copper, 36 grams silver and 1.2 grams gold per tonne. If Audrey is able to raise the funds it is seeking, about $32 million will be spent on development work needed to access the 1100, while the balance is used to pay down debt.
Huyhn says about 75 employees will be recalled when work resumes at Mobrun, but she couldn’t predict when that would be.
“We have learned that international institutions don’t work at the same rate that we do and it is difficult to say (when the mine will reopen),” she told The Northern Miner.
“It is important to us that we are not getting any pressure from Elders,” she said.
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