Cassiar gets $25m. loan

The government of British Columbia has agreed to loan Cassiar Mining up to $25 million to develop its McDame asbestos deposit near Cassiar, B.C. Because of its difficult financial position, Cassiar Mining was unable to secure a conventional loan for the project.

The underground development, which is scheduled to coincide with the phase-out of Cassiar’s open pit mining operation in 1991, will extend the mine’s life to at least the year 2000.

About $20 million of that loan will be drawn down by 1991, the company said. The other $5 million is apparently available for further development of the deposit which is still open at depth

The new underground operation will “sustain 490 permanent jobs in addition to those necessary for the $43.4-million construction program,” said President James C. O’Rourke. He emphasized that the loan will help “offset the lack of infrastructure in the area and will be repaid from a portion of the cash flow generated from the McDame deposit.” Bank financing, cash flow from operations and working capital will make up the balance of the funds required, he added.

O’Rourke and his new control group have apparently engineered a real turnaround at Cassiar Mining. Net earnings for 1987 were $3.7 million or 23 cents per share compared to a loss of $547,000 or 11 cents per share in 1986. Revenue of $58 million was approximately 20% better than the previous year.

Higher fibre sales and the reduction in annual depreciation expense due to the extension of the useful life of existing assets, were cited as reasons for the improvement.

The company has put the underground development program out for bid and submissions should be returned in early April. Actual work will probably begin this May, O’Rourke predicted. McDame will be a 5,500-ton-per-day trackless operation, the province’s second largest after Cominco’s Sullivan mine at Kimberley, B.C., which, incidentally, is about twice the size.

Asbestos markets seem to be strengthening and indeed Cassiar has increased prices for certain product lines, O’Rourke said. In at least one instance, however, the company has been forced to reduce prices to hold onto its market share. But he added: “We are selling more than we are producing.”