Formation Capital buys Sunshine refinery

Denver — Formation Capital (FCO-T) has acquired an option to buy a silver refinery, antimony plant and tailings pond at the Sunshine mine, near Kellogg, Idaho.

The purchase price is US$2.3 million, though the company may wait until the end of next year to complete the deal by making quarterly option payments.

Formation, which has paid its first US$200,000 instalment, intends to use the facilities to treat cobalt concentrates from a project 200 miles to the south.

The refinery, built in 1985, uses pressure leaching, which is well-suited to cobalt extraction. The company believes the refinery could produce up to 2,000 tonnes of high-quality cobalt and 2,000 tonnes of copper annually. The cobalt mineralization also contains a significant gold credit, which could help lower operating costs.

The recently reorganized Sunshine Mining & Refining (SSMR-O) has sold several other assets from its namesake property over the past few months. Although the value of Sunshine’s shares has plunged by 90%, to as low as US20 from the reissue price of US$2.50, the company intends to hold on to the Pirquitas silver project in northern Argentina until silver prices improve.

Based on a feasibility study, the project contains 129 million oz. silver, plus significant zinc and tin reserves. As an open-pit deposit, it could produce up to 11 million oz. silver, 3,200 tonnes tin and 16,300 tonnes zinc per year at a cash cost of US$1.53 per oz. silver. Capital costs are pegged at US$140 million.