Shipes to try SX-EW at Caribou

A new management team led by Arimetco International (TSE) Chairman Roy Shipes has taken control of Breakwater Resources (TSE), after shareholders of Breakwater approved a debt restructuring plan.

Shipes has emerged as Breakwater’s Chairman and chief executive officer, replacing Peter Steen who resigned along with several other directors at a special meeting in Vancouver.

The move allows Shipes to try and revive ailing Breakwater which had run into financial difficulties following an aggressive expansion plan that left it with debts of around $93.8 million.

“The company was literally being bled to death by interest payments,” said Shipes, who has won a major following among mining analysts for moving Arimetco agressively into copper mining, using solvent extraction- electrowinning (SX-EW) technology at properties in the US.

Under the restructuring, the Shipes Group has acquired about 39 million of Breakwater’s 144 million issued shares and has a 2-year option to pick up another 12 million held by Dundee Bancorp for 40 cents each. When the options are exercised Shipes will own 35% of Breakwater while, Dundee’s interest drops to about 20%.

Having acquired a 50% stake in Breakwater’s Caribou mine in New Brunswick, Arimetco is hoping that the SX-EW method will enable it to produce cathode zinc at a daily rate of 2,200 tons-per-day using similar technology. “It will take us about a year and a half to complete the tests and construct the necessary production facilities,” said Shipes.

Arimetco was able to acquire the Caribou interest in exchange for paying half of the $4.5 million needed to purchase debts of $36 million owed by Breakwater to Australian banks. In its new management role, Arimetco is also responsible for overseeing Breakwater’s 50% interest in the Cannon gold mine in Washington and El Mochito zinc mine in Honduras. Together, they are expected to generate about $15-17 million in revenues this year. The restructuring also involved the conversion of a $30 million Swiss debenture into preferred shares which can be converted into common shares on a one for one basis when the common shares reach $1.50. An additional $6 million owing to Dundee Bancorp was converted into equity at 20.5 cents a share.