Corona buys stake in potential zinc mine

By increasing its stake in Conroy Petroleum and Natural Resources to 27.6%, Corona (TSE) is gaining a position in what could be a major lead-zinc producer. Conroy is developing a large, shallow, lead-zinc deposit near Galmoy in Kilkenny Cty., Ireland. Probable reserves on the property, at depths of 60-100 metres, stand at 7 million tonnes grading 11% zinc and 1% lead.

Corona, through its Irish subsidiary Lemington Ltd. of Dublin, has purchased 8.5 million shares of Conroy to add to the 1.7 million shares owned by Corona associate, Noramco Mining (TSE). The purchase cost Lemington the equivalent of about $14 million.

“This initial purchase was made for investment purposes and we are considering increasing our investment,” said Lemington Chairman Paul Carroll. But he added that as soon as Lemington’s investment in Conroy reaches 29.9%, Lemington would be forced to make a bid for all the shares. Carroll said that his company has no intention of taking over Conroy.

Conroy is procuring all the necessary permits to commence operations, and the company should reach commercial production by 1992. The production rate is expected to be about 1,800 tonnes per day. At this rate, reserves would support a 10-year mine life.

The Conroy purchase is part of Corona’s strategy to increase its exposure to base metal mining, with a focus on lead and zinc. Earlier this year, Corona increased its stake in base metal miner Breakwater Resources (TSE) to 27.6%.

“We see some opportunity for joint smelter contracts with Breakwater,” Carroll said. Lead-zinc concentrates from Breakwater’s Caribou mine in New Brunswick are being shipped to a smelter in Europe, and will soon be joined by zinc concentrates from the new Estrades zinc-gold mine in Quebec.

On Aug. 28, when the gold price dropped back to US$388.25 per oz., Corona’s share value dropped by nearly 11%, compared with much more modest drops for other gold producers. Observers suggest that the company’s recent financial and base metal acquisitions, which may have shaken investor confidence, are dragging down Corona’s value.