With zinc prices foundering in the US33-to-36-per-lb. range,
Noranda’s president of zinc operations, George Jones, says the forecast for the zinc market over the next few years is for continuing oversupply and that conditions could be favourable for the mine’s development in 2005-2006.
“We will continue to evaluate the situation every quarter and will inform our employees and the community of our decisions,” he says.
Noranda made the announcement to lessen the impact on 255 employees of the nearby Bell Allard mine, who had expected to be hired on at Perseverance after Bell Allard closes in the fourth quarter of 2004.
Discovered in 2000, Perseverance comprises three high-grade zones: Perseverance, Equinox and Perseverance West. Combined resources are estimated at 5.1 million tonnes grading 15.82% zinc and 1.24% copper, plus 29.4 grams silver and 0.38 gram gold per tonne. The project is just 6 km from Noranda’s Matagami concentrator.
Noranda has a 90% stake in Perseverance. Following a feasibility study, Socit de dveloppement de la Baie James has the right to participate at 10% or convert its stake to a 2% net smelter return royalty. Noranda can halve the royalty by paying $1 million.
Despite the postponement at Perseverance, Noranda has budgeted $3.4 million for exploration in the Matagami region during 2003.
Meanwhile, in Murdochville, Noranda and the Quebec government face a $15-million lawsuit launched by residents angry that the local smelter closed its doors last April. The Murdochville copper mine ceased operations in 1999.
Residents claim that Noranda lured them to the town and encouraged them to buy houses. Residents also hold the government partly responsible for the smelter’s closure. In all, 156 plaintiffs are seeking $97,000 in compensation.
Noranda says it has already offered about $15 million worth of compensation, including premiums and early retirement packages, and offered to buy back houses at 65% of their value before the mine’s closing.
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