Breakwater revives Caribou operation — Company turns $3-Million profit in first quarter

Toronto-based Breakwater Resources (BWR-T) will soon have a third wholly owned zinc operation in production — the resuscitated Caribou project in northern New Brunswick.

At the company’s annual meeting in Toronto, Breakwater President Gordon Bub reported that the Caribou zinc-lead-silver project, construction of which is 80% complete, is expected to enter production this summer.

The $54.4-Million project consists of two mines — the Caribou, an underground operation 50 km west of Bathurst, and the Restigouche, an open pit 30 km west of Caribou.

Together, the mines have an estimated reserve of 6.2 million tonnes grading 7.2% zinc, 3.9% lead and 97 grams silver per tonne, with a resource of 11.1 million tonnes grading 8.1% zinc and 4.1% lead (no silver values reported).

A new reagent scheme is expected to boost recoveries above levels obtained before Breakwater suspended mining on the property in 1990. Also, the daily milling capacity has been raised to 3,000 tonnes, setting the project life at about eight years.

Breakwater’s two other mining projects are the underground Mochito zinc-lead-silver mine in Honduras and the underground Nanisivik zinc-silver mine on Baffin Island in the Northwest Territories. The latter was purchased last summer.

In 1997, the three projects are expected to produce a total of 120,000 tonnes zinc, 22,000 tonnes lead and 2 million oz. silver. These figures represent increases of 96%, 135% and 370%, respectively, over last year’s production levels.

At the meeting, Bub suggested that Nanisivik is by no means the company’s last acquisition. He refused to be specific about future acquisitions but did say that “although no deals have been made, we are in the advanced stages of negotiation — all in zinc properties.”

Although the company still intends to spin off its gold properties, Bub stated that these plans have been delayed, noting that it was a matter of “bad timing.”

For the first quarter, Breakwater earned $3 million (or 5 cents per share) on revenue of $35.9 million, up from $56,000 (0 cents per share) on $12.1 million for the same period in 1996.

The increase in profits is attributed to: higher zinc prices; lower treatment charges, increased production and lower costs at the Mochito mine; and the inclusion of results from the Nanisivik mine.

The company predicts that zinc prices will continue to strengthen as inventories steadily decline from the peak levels attained in early 1995.