Miramar bids on Giant mine — Crosstown rival would take mine, leave mill

The final scenes of the Royal Oak Mines tragedy appear to be playing out, with a new player, Miramar Mining (MAE-T), waiting in the wings.

Miramar, which operates the Con mine in Yellowknife, N.W.T., announced it had made an undisclosed offer for Royal Oak’s Giant mine up the road. That offer now awaits a decision from the Canadian Automobile Workers, the union representing the Giant employees. CAW Local 2304 is examining its own options and may be willing to sponsor an employee buyout.

Royal Oak’s receiver, Price Waterhouse Coopers, has given the union until Sept. 22 to make up a proposal for the Giant mine. If the union does not put in a bid, the receiver will take Miramar’s firm offer.

Miramar’s offer was for “the mineral resources and the property assets only,” and not for the Giant mill. The company said it would temporarily suspend production at Giant and reopen the mine as a satellite of its Con mine.

Under Miramar’s plan, Giant would produce 270-360 tonnes per day and deliver broken ore to the Con mill. The Con mine would produce between 540 and 820 tonnes per day to make up the balance of the mill’s 1,090-tonne capacity. The Giant mill, which could handle up to 860 tonnes per day, would not be reopened; Miramar said it hoped to find operating efficiencies in combining the milling and administrative sides of the operation, and did not want to operate the roaster at the Giant mill.

Miramar, which set a condition that its own workforce would not suffer any layoffs, said about 50 positions would be available for the Giant workforce. Giant currently has about 200 hourly rated employees.

Earlier speculation on a possible buyer for Giant had fastened on Viceroy Resource (VOY-T), but the company had taken itself out of the running by late August.

Royal Oak’s Pamour and Nighthawk mines in northeastern Ontario, which feed the Pamour mill east of Timmins, are being kept on care-and-maintenance pusuant to a court order of Aug. 31. The mill has remained in operation, and some ore is being mined from the Pamour open pit to keep it fed, with about 60 hourly rated employees still at work.

The court order delayed the receiver’s intended closure of the mine and mill and gave the United Steelworkers, which represents the Pamour workforce, until Sept. 15 to come up with a plan to keep the two mines open. The union was considering a possible employee buyout as one option.

There has still been no sign that a buyer will emerge for Royal Oak’s Kemess mine in British Columbia. Two bidders were looking at the mine and at Royal Oak’s primary creditor, Trilon Financial, which, with associated companies, is owed about US$120 million. Trilon affiliate Northgate Exploration (ngx-t) owns about US$35 million of that debt and, as early as December 1998, had indicated its interest in providing “working capital and other financial support” for the mine. Northgate warned it would take measures to ensure that the cash flow from Kemess was segregated from other Royal Oak revenue streams.

One Royal Oak asset has been sold off: the company’s 35% interest in Highwood Resources (HWD-T) is being sold to mining contractor Dynatec (DY-T) for just over $6 million. Highwood’s principal interests are the Parson barite mine near Golden, B.C., a barite processing plant at Lethbridge, Alta., and a 55% interest in a Chinese barite operation. Highwood also holds producing interests in limestone and gypsum, and has the Thor Lake beryllium project southeast of Yellowknife, N.W.T.