Lisheen zinc mine approaching design levels

The owners of the Lisheen zinc-lead mine in Ireland are reaping the rewards of an action plan, implemented in the second half of last year, which sought to overcome obstacles to production.

By the end of the first quarter of 2001, ore production had reached 86% of design capacity, or 9% above plan, and the mill had processed a monthly record of 104,199 tonnes during March. Although production slipped in April to 92,564 from 107,368 tonnes in March, it was still 2% above plan. The decrease is attributed to a scheduled maintenance stop, which included the re-routing of water lines.

Limerick, Ireland-based Ivernia West (IVW-T), half-owner of Lisheen, is confident the mine will reach design levels by mid-year, some six months behind the original schedule. Anglo American (AAUK-Q) owns the other half of Lisheen. The mine is managed by the Lisheen joint venture through equal representation of Ivernia and Anglo.

At full production, the 4,500-tonne-per-day mill is expected to process 1.5 million tonnes of ore annually, producing 300,000 tonnes of zinc concentrates and 40,000 tonnes of lead concentrates per year over a mine life of 14 years.

During the first quarter, production totalled 47,852 tonnes of zinc concentrates and 9,960 tonnes of lead concentrates. Recoveries averaged 77.55% for zinc and 75.13% for lead, compared with feasibility expectations of 92% and 78%, respectively. The joint venture has begun modifying the mill’s zinc circuit by adding conventional cleaner cells in an effort to boost zinc recoveries to design levels. The new cells will be in place by the end of the second quarter.

Officially, the Lisheen mine began commercial production on Jan. 1, 2001. The mine had an operating loss of US$2.9 million for the first three months of the year. The operation was affected by low metal prices and costs associated with the ramp-up to full production. Given the current weak metal prices, the mine is not expected to turn a profit until full production levels are reached.

Proven and probable ore reserves, at June 30, 2000, amounted to 15.4 million tonnes grading 11.76% zinc and 2.05% lead. Additional measured and indicated resources are estimated at 14.5 million tonnes grading 14.4% zinc and 2.54% lead.

Ivernia West posted a loss of US$5.6 million (or 5 per share) for the quarter ended March 31, compared with a US$2-million loss (2 per share) in the corresponding period a year ago. Since November 2000, Anglo has provided funding for Ivernia’s 50% share of certain cost overruns at Lisheen. At March 31, these payments had totalled US$12 million. Ivernia must resume funding of overrun costs and other contributions by Sept. 30, or face applicable penalty provisions under the Lisheen joint venture. The company estimates that its share of capital expenditures for the Lisheen mine in fiscal 2001 will be US$17.6 million, which will be funded by, or on behalf of, Ivernia from the mine’s cash flow.

Ivernia had a working capital deficiency of US$8.8 million at the end of the March quarter. The company has 117.5 million shares outstanding and US$9 million in cash and cash-equivalents. Long-term debt stands at more than US$89 million.

Ivernia West’s North American office is in Toronto.