Faro mine suspension takes toll on Anvil Range

The last fiscal year was a difficult one for Anvil Range Mining (ARO-T), owner and operator of the mothballed Faro zinc-lead mine in the Yukon.

The Toronto-based firm reported a loss of $35.3 million (or $2.15 per share) for the 14-Month period ended Dec. 31, 1996, compared with a 3.1-Million loss (23 cents per share) for the previous, 12-Month period.

(Anvil has changed its year-end date to Dec. 31 from Oct. 31.) The 1996 loss includes the $31-Million writedown of its mining properties during the three months ended Oct. 31, 1996.

Although commercial production began at Faro in November 1995, the company suspended mining in December 1996, citing unexpectedly low base metal prices, stripping delays and a strong Canadian dollar. The mill continued processing a low-grade stockpile until the end of March, when processing was also discontinued.

“We would like to reopen Faro in the latter part of this year, but we have no firm date at this point,” says Victor Wells, Anvil’s vice-president of finance. “Several things must come into play before we restart the mine, including our financing, our cost structure, and our negotiations for greater co-operation with the Yukon government.”

During the 14-Month period, Anvil generated $214.1 million in revenue from production at Faro of 345,700 tonnes of zinc concentrate and 186,000 tonnes of lead concentrate.

The concentrate tonnage was equivalent to 566.9 million lb. of payable metal, for which was realized average prices of US46 cents per lb. for zinc and US34 cents per lb. for lead.

To produce the concentrate, the mine moved 27.2 million tonnes of waste and 6.1 million tonnes of ore. The mill processed 4.8 million tonnes of ore at an average head grade of 5.14% zinc and 3.04% lead. Mill recoveries were less than expected, averaging 71.3% for zinc and 76.7% for lead.

In February 1997, Anvil arranged, with Cominco (CLT-T), a private placement of 4.1 million shares from its treasury at $2.30 per share. Cominco now owns about 28% of Anvil Range, while South Korea’s Hy-undai owns about 20%.