Anvil Range shuts Faro again — Company granted protection from creditors

Financially troubled Anvil Range Mining (ARO-T) has been granted court protection from its creditors by the Ontario Court (General Division).

The company will be protected, until Feb. 16, under the Companies’ Creditors Arrangement Act.

Anvil Range has announced that hard times in the base metal markets have forced it to shut down its wholly owned Faro operations in the Yukon and to defer the interest payment of $1.3 million (due Jan. 17) on its outstanding 8.5% convertible debentures. According to a release, the company will enter into discussions with the holders of the debentures “in order to seek an arrangement with them as part of an overall restructuring plan.” The Faro operations consist of a crushing, milling and concentrating facility and three base metal deposits.

Commercial production began in November 1995, but the company suspended mining in December 1996, citing unexpectedly low metal prices, stripping delays and a strong Canadian dollar. At that time, Anvil officials suggested that, to be profitable, the operation needed zinc and lead prices of US50cents and US35cents per lb., respectively.

Anvil Range reopened Faro last November. That month, the average price of zinc was US53cents per lb.; lead sold for just over US25cents per lb. On Jan.

20, zinc was just under US50cents and lead sold for US23cents.

Anvil Range says its cash resources “have been substantially depleted” as a result of the aforementioned metal price drop. As a result, the company has begun shutting down its Faro operations.

Technical consultant Strathcona Mineral Services is reviewing Anvil Range’s operations with an eye to reducing operating costs and improving the company’s mine plan.

For the 9-month period ended Sept. 30, 1997, Anvil reported a loss of $11.6 million (or 61cents per share) on revenue of $31.2 million, compared with a loss of $25.8 million on $150.9 million in the last three quarters of Anvil’s previous financial year, which ended Oct. 31, 1996.

As of mid-1997, Cominco (CLT-T) was Anvil Range’s largest shareholder, with 27.73%, followed by South Korea’s Hyundai Corp, with 19.77%.