MSV makes Chibougamau mining plans

The mining assets of Westminer Canada, including the Copper Rand and Portage mines and the 3,000-ton-per-day concentrator in Chibougamau, Que., have been purchased by MSV Resources (ME), which wants to start up the operations again in the near future.

MSV says both sides have signed all contracts related to the transaction, which will see MSV become a producer of 45,000 oz. gold and 11 million lb. copper per year. The deal calls for MSV to pay Westminer a royalty of 37.5 cents per ton of ore milled at the Copper Rand mill, commencing on the second anniversary of the sale.

In addition, MSV will create an environmental fund of $4.3 million to provide for the ultimate restoration and rehabilitation of the mining sites. Westminer will contribute $2.4 million to this fund. Societe de developpement de la Baie James, a shareholder of MSV, has agreed to indemnify Westminer against any future environmental liabilities related to the assets. MSV and the Societe have also signed a contract under which the Societe will provide MSV with a temporary guarantee of up to $2 million against a line of credit; MSV will pay the Societe an initial royalty of 25 cents per ton of ore processed during the first two years, increasing to 37.5 cents per ton thereafter; and MSV will pay an additional royalty of 25 cents per ton for each ton of ore processed having a net value (net smelter royalty) in excess of $70 per ton.

MSV, which also announced the signing of a 3-year agreement with its unionized (Steelworkers of America) employees at Chibougamau which includes salary reductions, says it will work to reduce production costs to about $52 per ton.

The workers have been granted one seat on the MSV board of directors and one representative on the operations management committee. MSV, which wants to resume mining operations as soon as possible, says it will introduce a profit-sharing plan for its workers.

Major shareholders of MSV are Corpormin Management of Montreal, the Societe, Soquem and Kerr Addison Mines (TSE). The public owns 55% of the 18 million shares outstanding of MSV.