EXPLORATION ’93 — Chibougamau acquisition provides Corpomin

Things are on the move for Corpomin Management, a private Montreal company which does mining exploration work in Quebec through the use of public companies and flow-through funds.

Mario Caron, one of two Corpomin partners, can easily make that claim after his MSV Resources (ME) (of which Corpomin is a major shareholder) recently acquired the mining assets of Westminer Canada in Chibougamau, Que. “It’s a major, major event,” says Caron, president of MSV. “MSV has gone from a no-employee to a 300-employee-plus company.”

The deal gives MSV (owned 33% by Corpomin and the Societe de developpement de la Baie James) the Copper Rand and Portage mines and a 3,000-ton-per-day concentrator in Chibougamau. And it makes MSV an important producer of 45,000 oz. of gold and 11 million lb. of copper per year, as well as increasing the value of its Eastmain property, 300 km northeast of Chibougamau. Says Caron: “We’re very optimistic about the Chibougamau situation because, at current prices, we can make this work. It’s got to pay for itself right now. Otherwise, we would not have got involved.”

MSV hopes to reduce production costs to about $52 per ton and, at current metal prices, expects net revenues of about $64 per ton, representing $35 million in annual sales.

The key to improvement was controlling labor costs, which represented about 65% of operating costs, Caron says. Through a pioneering agreement with the United Steelworkers of America, labor costs have been cut to below half of operating costs, for hourly employees.

“As far as we’re aware, it is a first in the mining industry in Quebec,” says Caron of the deal, which replaces the standard bonus system with profit-sharing. The 3-year deal also includes salary reductions of 15-20% and reductions in fringe benefits.

The profit-sharing is based on a production goal of 550,000 tons per year and a formula that provides 30% to employees on the first $10 per ton of profit, 40% on the increment between $10 and $12.50 per ton and 50% on the profits exceeding $12.50 per ton.

Negotiations on the deal took less than a month and were aided by Westminer shutting down the Chibougamau operation in November, 1992. “The union would like to see this succeed and become a way of the future,” Caron says. “The traditional bonus system underground has been criticized by several parties.” MSV Resources is by far the most active company under the Corpomin banner, which was formed in 1985 by partners Caron and Pierre Boudreault. The company restricts itself to being involved with no more than five public companies at any one time. Aside from MSV Resources, Corpomin manages Cache Explorations (ME) and Canchrome Mines (ME).

Nova-Cogesco Resources (TSE), which was one of Corpomin’s companies until last fall, was involved in the discovery of the Silidor deposit. And VSM Exploration (ME), managed by Corpomin until last December, was instrumental in the development of the Grevet project, which has since been taken over by Cambior (TSE).

“I think what differentiated Corpomin through the years was our `privileged’ association with senior companies in the industry,” Caron says. “We’ve always entertained excellent relations with the seniors — the Norandas, the Placer Domes, the Cambiors.”

Mining has been Caron’s life since he graduated in 1975 with a degree in mining engineering from McGill University. He started at Selbaie Mines, which gave him a taste for project startup.

In the 1980s, he joined the consulting engineering firm Groupe Conseil Roche, based in Quebec City, as director of its Rouyn division. Later he joined Somicom, Corpomin’s predecessor. In 1989, he and his mining engineer partner Boudreault bought out the original partners and changed the company’s name. “Our background is operations; therefore, we do exploration with a real view toward bringing mines into production,” Caron says. With a small staff, Corpomin is lean, highly technical and can move quickly, he adds. “If there is a reproach that the street has on us it’s that we’re not promotional enough.”

For the time being, Corpomin will be focusing on Quebec, specifically Chibougamau. “Chibougamau has often been neglected for reasons unknown to me,” Caron said. “We hope to benefit from that lack of attention.” Caron, who believes base metal prices will firm up as the world comes out of recession, says the poor economy has provided Corpomin with opportunities. “The Westminer situation would not have been available to us in a buoyant economy. It would have been too expensive. Sometimes it is in adversity that you get opportunities and you have to jump on them.”

— Daniel Kucharsky is a freelance writer from Montreal.