Cambior will fund Lac Knife

A partner has been lined up by Societe d’Exploration Miniere Mazarin (ME) to bring its Lac Knife graphite project near Fermont, Que., into production. Gold producer Cambior (TSE) has agreed to fund the first $4 million in capital expenditures needed to develop the deposit near the Quebec-Labrador border in return for a 50% interest.

The sale is subject to certain conditions, including obtaining a mining permit from the provincial ministry of the environment, finalization of various commercial agreements related to the marketing of the graphite concentrates produced, and the approval of Cambior’s board of directors and regulatory authorities.

Under the agreement, for the first 10 years of production, Cambior will grant to Mazarin an additional interest in the surplus revenues of the venture, the surplus to be shared on a 75% Mazarin-25% Cambior basis.

Upon signing the final agreement, Cambior will subscribe to one million unissued Mazarin common shares at $1.80 per share. And, subject to the attainment of certain revenue levels by the joint venture, Cambior will further subscribe to up to one million unissued Mazarin common shares at $2 per share during the next three years.

Cambior will manage the joint venture’s preproduction and production activities. Mazarin will be responsible for the international marketing of the graphite concentrate produced. The financing required to develop the mine will be obtained by Cambior.

Mazarin President Regis Labeaume said the mine could be in production in 10-12 months. Reserves currently stand at more than eight million tons grading 17% graphitic carbon.

Mazarin has already negotiated overseas annual sales agreements with German and Japanese companies. Labeaume said sales agreements with British and American firms are in the works. By the end of August, Labeaume said he expects Mazarin will have sold forward 18,000 tons of concentrate.

Mazarin was unsuccessful earlier this year in negotiating a development agreement with Princeton Mining (TSE) for the Lac Knife project which would have given Princeton a 50% interest in the project.