Breakwater nixes Bolivian zinc deal

Breakwater Resources (BWR-TWR-T) is scrapping its plans to buy a controlling interest in Bolivian zinc producer Minera.

The company attributes the decision to delays caused by Minera’s failure to restructure, and a subsequent inability on the part of the players to renegotiate the deal in response to falling zinc prices in autumn and early winter.

In September 1997, Breakwater agreed to buy a 60.3% interest in Minera for $11 million in cash, payment of US$2.2 million over five years, 11 million Breakwater shares (which peaked above $9 during late September and have recently traded below $3) and 4 million share purchase warrants. That interest dropped to 58.8% in November 1997.

Through its subsidiaries, Minera controls seven producing operations. In Bolivia, it operates four zinc mines (three are wholly owned; the fourth is half-owned), a heap-leach silver tailings recovery operation (roughly an 80% interest) and a gold mine (95% interest). In Argentina, 350 km from Buenos Aires, Minera owns and operates a zinc mine and smelter. The company also holds exploration properties in Bolivia.

As of Sept. 30, 1996, Minera’s assets totalled US$143.5 million and its debt stood at US$28.1 million. The company earned US$5.5 million on revenue of US$164 million for the year ended Sept. 30, 1996, during which time it produced 129,261 tonnes zinc, 23,762 tonnes lead and 5.5 million oz. silver in concentrates.