No buyouts at Giant, Pamour

The union locals at the Giant and Pamour gold mines have decided not to pursue employee buyouts of the operations, part of the holdings of failed gold producer Royal Oak Mines.

Local 4440 of the United Steelworkers of America, the union representing the Pamour employees in Timmins, Ont., announced it would not be submitting a proposal to keep the mine open. Studies by consulting firm Strathcona Mineral Services and accounting firm Deloitte and Touche concluded that the mine had been short of capital investment for some time and that replacement of aging equipment and new exploration would consume so much new capital that total costs would be intolerably high for any new operator.

Canadian Automobile Workers Local 2304, which represents the workforce at Giant in Yellowknife, N.W.T., reached a similar conclusion recently, when a report it commissioned from consulting firm Roscoe Postle Associates concluded that the remaining reserves at Giant would likely be minable at a cash cost of around US$290 per oz. Giant had only one year of minable reserves blocked out at the time Royal Oak went into receivership, and Roscoe Postle estimated that an adequate exploration program to increase the reserves would cost another $10 million.

Both unions will be seeking court orders specifying that receiver Price Waterhouse Coopers has inherited the existing collective agreements at the mines and is obliged to pay the employer’s part of pension fund contributions and other benefits.

The union’s withdrawal from the Giant bidding process leaves Price Waterhouse with one bid, from Miramar Mining (mae-t), which has proposed to run Giant as a satellite of its Con mine in Yellowknife. Miramar would retain about 50 employees from Giant, which has a workforce of about 300.

There is still no sign of a bidder for either Pamour or the new Kemess copper-gold mine in northwestern British Columbia, which cost about $480 million to put into production. Kemess is still operating. However, a shutdown is under way at Pamour.