Lac acquires 85% interest in Chilean zine mine, properties

Lac Minerals, through its wholly owned U.S. subsidiary Lac Minerals (USA), has made a $19-million (US) investment in a zinc mine and several base and precious metals exploration properties in Chile.

The company will acquire an 85% equity interest in Sociedad Contractual Minera Toqui (scmt) and two affiliated companies in the South American country.

Lac has approval from the Central Bank of Chile to use the government’s debt equity swap mechanism in the purchase.

Essentially what that means, according to Lac, is that a number of local and international banks who loaned some $30 million to scmt have agreed to take Lac’s $19-million investment instead of waiting for the Chilean mining company to perform in the repayment of that debt.

Lac ends up with an 85% interest in a debt-free, producing company with the potential for increasing reserves.

Lac has established a Chilean subsidiary, Minera Lac (Chile) S.A., to own and operate the properties held by scmt.

All are located in southern Chile. The major asset is a 650-tonne-per- day underground zinc mine known as the Minera Toqui mine. Reserves currently stand at about four million tonnes grading 10% zinc. The mine produces revenues of $5.5 million per year. Mining costs are $12 per tonne.

As part of the $19-million investment, Lac has included $3.5 million for exploration, engineering, development and some interim plant improvements at Toqui. Some $6 million will be spent over the next three years to increase reserves on all the properties.