Vancouver-based South Atlantic Ventures (SAA-V) has joined the ranks of mid-tier producer after completing the acquisition for the Zinkgruvan mine in Sweden from Rio Tinto. The deal to purchase the mine for US$101 million was first announced in early March this year. The company also reported encouraging drill results for its Norrbotten property in northern Sweden.
South Atlantic had no trouble closing the $160 million financing arranged by a syndicate led by GMP Securities. The financing comprised 20 million shares offered at a price of $8.00 per share. The company had initially offered 18 million common shares at $8 per share for $144 million on a best-efforts basis through the syndicate.
The Zinkgruvan mine provides the company with a steady cash flow. South Atlantic is expected to produce more than 170 million lbs. zinc, and 10 million lbs. copper in 2004, which includes its 37% interest in the Storliden mine in Sweden.
The Zinkgruvan mine which has been operating since 1857, produced 145 million lbs. zinc, 70 million lbs. lead and 1.8 million oz. silver in 2003. The metals are mined using panel stoping between levels of 350 and 965 metres. The mine’s deepest ramp has reached over 1 km in depth and the mill was modernized in 1998.
The mine life was estimated at 19 years but the company believes there is significant room for resource expansion. Proven and probable reserves at Zinkgruvan are estimated at 9.5 million tonnes averaging 9.8% zinc, 4.8% lead and 97 grams silver per tonne. The total measured, indicated and inferred resource is pegged at 10.4 million tonnes of 9.7% zinc, 3.9% lead and 94 grams silver.
On the exploration front, the company announced more drill results from its Norrbotten property in the Kiruna district of northern Sweden. The drilling tested the extent and nature of the copper-gold mineralization at the Rakkurijarvi discovery and some IP and mag targets in the surrounding area. The zone is considered to be a new iron-oxide copper gold (IOCG) discovery.
Most of the holes returned significant intersections with Hole RAK04023 on Section 2950 returning 48.5 metres grading 1.07% copper and 0.27 grams gold per tonne from a downhole depth of 75.5 metres.
Shares in South Atlantic were up 55 cents or 7% to close at $8.55. The company is voting to change its name to the Lundin Group at its annual general meeting on June 11.
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