New backer raises hopes for revival of Caribou zinc mine

The meetings took place at the London, England, offices of British financier Howard Miller who has agreed to bankroll the Bathurst project in return for a controlling stake in East West.

A wholly owned affiliate of Australia-based East West Minerals N.L., East West brought the mine into production last January. But it was forced to close the operation down seven months later after falling far short of its 124,000-tonne production target. Details of the financial package won’t be revealed until it has been approved by East West’s Australian bankers and the New Brunswick government, but Bathurst Base Metals, a private company controlled by Miller, has already outlined tentative plans for the mine.

Miller was introduced to East West President Cameron Glover by Ned Goodman, chairman of Toronto-based Corona Corp. (TSE). As a result, Corona’s Vancouver- based affiliate Breakwater Resources (TSE) has been hired to manage the development program.

Pending results of the London negotiations, Breakwater is planning to undertake an extensive development program at the mine before milling operations resume in February, 1990, according to company sources. Having decided that East West didn’t complete enough development work to meet its production targets, the Vancouver company may sink a 426-m (1,400 ft), 3-compartment shaft and accelerate the Caribou production rate.

“The main problem is that we were undercapitalized and we couldn’t raise any money in the present market climate,” said Colin Smith, mine general manager before production was halted.

“We didn’t have enough funds to sink a shaft and there wasn’t sufficient ore to keep the 2,000- tonne-per-day mill running,” said Smith.

While reserves at Caribou to a depth of 1,000 m stand at 15 million tons grading 11% combined lead and zinc, mine workings have yet to be completed beyond the third level. As a result, only 300,000 tons of material had been mined from the property before East West decided to shut it down in July.

According to original production estimates, Caribou was expected to churn out 124,120 tonnes (136,532 tons) of lead/zinc concentrates in 1989 and generate an annual profit of $24.5 million.

Smith predicts that Bathurst Base Metals will have to spend around $25 million (on top of the $45 million already spent by East West since it acquired the project from Anaconda Minerals in 1986). The New Brunswick government will be asked to act as guarantor for about $5 millon, Smith said.

When East West agreed to acquire the project, it became sole owner of five additional base metal deposits in the Bathurst camp. But they are scheduled to be kept on the back burner under the proposed mining plan. “We will shelve all grassroots exploration for now until we get the thing running profitably enough to sustain further exploration,” said new mine manager Bruce Dunlop.

About 30 personnel are working at the Caribou mine site. But that number should increase to around 175 when a mining contractor is hired and predevelopment work resumes.

When The Northern Miner attempted to reach Breakwater President Brian Pewsey for comment on the Caribou situation, he was en route to the London discussions and, therefore, was unavailable for comment.

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