Breakwater will issue 18 million shares plus 5 million warrants to Boliden. Each warrant is good for an additional share at $1 apiece until Jan. 28, 2009. The deal is expected to close early in the second quarter of 2004, pending due diligence by both companies, a definitive agreement, and approval by regulators and both companies’ boards.
In 2003, the 1.25-million-tonne-per-year underground mine and processing facility produced 57,400 tonnes zinc, 10,700 tonnes copper, 27,300 oz. gold and 720,900 oz. silver. Boliden says the production figures are lower than expected, owing to the mining of lower-grade ores. Still, the mine’s costs have been improving since completion of a cost-reduction and efficiency program in 2002.
Boliden has owned Myra since 1988; the operation, which comprises two integrated underground mines and one concentrator, has been in production since 1966. The operation comes complete with a storage and loading terminal in nearby Campbell River, B.C.
At the beginning of 2002, proven reserves at Myra Falls totalled 6.5 million tonnes grading 7.5% zinc, 1.4% copper, 0.5% lead, 1.4 grams gold and 46 grams silver per tonne. Probable reserves amounted to 1.9 million tonnes grading 5.2% zinc, 1.1% copper, 0.5% lead, 1.5 grams gold and 43 grams silver.
“The sale of Myra Falls is a logical step now that we have completed the transaction with Outokumpu,” says Boliden CEO Jan Johansson. “We can now concentrate on integrating the acquired mining and smelting operations in the new Boliden.”
Late last year, Boliden and Outokumpu pulled off an asset swap that saw the Finn’s remaining mining assets transferred to the Swede in exchange for a 49% shareholding in the reorganized Boliden. Boliden expects to realize a minor capital gain on the sale.
The news sent shares in Breakwater a nickel, or 7.5%, higher to 72 in early afternoon trading in Toronto on Feb. 16.
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