Billiton’s cash available to bolster Canadian presence

Armed with extensive financing from its parent, the Royal Dutch/ Shell Group, Billiton Metals Canada is launching an aggressive foray into advanced exploration and development in this country. Heading up the Billiton team is newcomer Andrew Flett, a British solicitor who will apply his legal expertise to a wide range of future acquisitions. Providing the technical knowhow as president of Billiton Resources Canada, a wholly owned subsidiary, is former president Leo Halliday.

As an example of things to come, Flett and Halliday have just completed a $17.5-million purchase of Trimin Resources’ (TSE) 32.9% interest in the Hanson Lake polymetallic deposit in northern Saskatchewan. Now in the advanced stages of exploration, Hanson Lake contains a preliminary reserve of 10.8 million tons grading 5.76% zinc, 0.42% lead, 0.95% copper, 0.015 oz. gold and 0.73 oz. silver per ton.

“We’re here for the long term,” Flett told The Northern Miner during a recent interview. “With the comfort of a major oil company behind us, we have an ambition to become a major player in Canada.”

As of December, Billiton Canada will have sunk US$60 million into Canadian ventures. By the middle of the decade, the company hopes to have multiplied this figure several times over, Flett said.

But why is Billiton so intent on Canadian expansion when so many other majors are taking their cash elsewhere? Flett explained that while Billiton has its hand in almost every other mineral-producing country in the world, its exposure in Canada has so far been limited. As well, he feels that flow-through has left the country with a bounty of “high-ground reserves” — the type of low-cost, long-life deposits the company is after.

“Shell sees Canada as one of the most fertile areas to invest” Flett said. “It seems to have limitless prospects.”

Operative in more than 25 countries, Billiton directly employs over 5,000 people and had net earnings of US$262 million in 1989.

While Billiton Canada has been active (although largely unsuccessful) in Canadian grassroots exploration since the early 1970s, it was not until Billiton, the international holding company, orchestrated a change in strategy in the late 1980s that the Canadian arm was given the mandate to seek more advanced projects.

This change of approach, from grassroots exploration to acquisition, led to Billiton Canada’s purchase of a 35% interest in Quebec’s Selbaie zinc-copper mine in 1989. Recently, Billiton took the opportunity to purchase another 4% from TCPL Resources.

“We are involved in the downstream (smelting, refining) side for copper and zinc,” Halliday said. “Selbaie is attractive because it produces both these products.”

With extensive global facilities for refining and marketing zinc and, to some extent, copper products, the two metals will be the initial focus of Billiton Canada’s exploration and development efforts. Precious metal projects are also of interest, Flett said, but these will be approached with greater caution.

Unlike most other major mining companies, Flett said Billiton Canada will not necessarily make operatorship or even majority interest a prerequisite for investment. “We don’t see ourselves as a sleeping investor,” he said. “But we see it as a marketing plus that we’re not so greedy as to insist on control.”

Billiton Canada is earning a 50% interest in the Blende lead-zinc project in the Yukon, currently its only farm-in venture, from NDU Resources (VSE).