Nyrstar buys Mid-Tennessee zinc mine

London, UK-based Nyrstar, the world’s largest zinc metal refiner, has bought the Mid-Tennessee zinc mine complex from the now-bankrupt Strategic Resource Acquisition Corp. (SRA) for about $15.7 million (10 million) in cash.

SRA shuttered the mine last October after only six months of production. The company pumped $150 million into the project so the mine complex could be restarted but low zinc prices and production issues resulted in a very uneconomical operation.

Nyrstar acquired the mine following approval from the US Bankruptcy Court on May 2. The mine has been closely associated with Nyrstar’s Clarksville smelter, which was originally constructed to treat concentrate from the mine complex.

Nyrstar says the Mid-Tennessee mine will account for half of the concentrate for the smelter once it gets the mine back into production, but the company says it will wait until it’s commercially feasible before doing so.

Zinc, today at US67 per lb., has not risen since last fall when SRA shutdown the mine.

Globex Resources (GMX-T), based in Rouyn-Noranda, Que., holds a 1.4% gross overriding royalty on all zinc production from the Mid-Tennessee complex when the London Metal Exchange zinc price is US$1.10 per lb. or higher, or 1% on all zinc production between US90 and US$1.09 per lb.

According to SRA’s last estimate, the mine had an indicated resource of 12.5 million tons grading 3.35% zinc plus 16.6 million inferred tons grading 3.43% zinc, using a cutoff of 2% with grades capped at 4.5%. The ore also has an average grade of 0.04% germanium and 0.05% gallium.

The mine was in operation for 28 years until 2003, when zinc slumped below US40 per lb. Before that, agricultural lime, gravel, germanium and even a few calcite and fluorite crystals helped keep the mine open when zinc prices were low.