A subsidiary of Toronto-based Caledonia Mining (TSE) has signed a letter of intent to purchase a 97% interest in Kamenolomy Strkopleskovne (KS), a Czechoslovakian industrial minerals mining company.
Centurion East European Mining, 75% owned by Caledonia, has agreed to pay the Slovakian government $6.55 million over four years for the company. Negotiations with several London-based investment funds interested in financing the initial payment of $2.06 million are under way. KS employs 340 people and operates seven quarries in Southern Czechoslovakia. It produces about 1.5 million tonnes of dolomite, limestone, andesite, quartzite, sand and gravel per year. At current production rates, reserves are expected to last for another 40 years.
Caledonia says KS’s most important asset is a 30-million-tonne dolomite deposit, which ranks among the top five such deposits in Europe. The mine supplies the Czechoslovakian glass industry as well as local paper, plastics, ceramic and agricultural industries at a rate of 370,000 tonnes per year. The operation has a capacity of 750,000 tonnes per year.
“Caledonia believes that the company’s very low cost base, location adjacent to Western Europe, high-quality products and under-utilized plant capacity (50%) coupled with a modern marketing campaign . . . should result in considerable improvement in future earnings.”
Caledonia, which was formed by the amalgamation of Golden North Resource (VSE), Thorco Resources (TSE) and a private company, expects to close the deal by June.
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