HBMS buying Ruttan mine from Sherritt

The Ruttan mine at Leaf Rapids, Man., is being acquired by Hudson Bay Mining and Smelting from Sherritt Gordon Mines in a deal that is expected to be concluded by July 15.

Hudson Bay Mining, a subsidiary of Inspiration Resources of New York, mines and processes metals, primarily copper, zinc, gold and silver, at Flin Flon and Snow Lake in northern Manitoba and has other resource operations throughout Canada.

Sherritt, faced with low metal prices, had stated its intention to discontinue operations at the Ruttan mine this year. Last December the company announced a writedown of remaining assets at the mine and provision for future closure costs.

The old mining company is attempting to reduce its current debt load through the sale of the Ruttan mine, its SherrGold gold mine at Lynn Lake, Man., and its oil and gas business.

The sale is expected to save all of the approximately 450 jobs at the mine site.

Part of the deal between the two firms involves an existing $10-million project loan from the Manitoba government, which Hudson Bay Mining will assume but under a different payback arrangement: the firm and the Manitoba government will now share equally in the mine’s cash flow.

Also, Hudson Bay Mining and the provincial government will each contribute $500,000 to a joint exploration program, focusing on copper and zinc in the west anomaly, which hopefully will extend the life of the mine beyond 1990.

In 1986, the Ruttan mine produced 65 million lb copper and 22 million lb zinc, and supplied 78% of copper concentrates and 28% of zinc concentrates bought by Hudson Bay Mining for its Flin Flon smelter. The Ruttan mine also produced 18,000 oz gold and 463,000 oz silver last year.

Ore reserves at the end of 1986 totalled about 9 million tons, containing 1.64% copper and 1.21% zinc.