Vancouver —
One of the largest underground mines in Europe, Zinkgruvan has been producing zinc, lead and silver since 1857. The 800,000-tonne-per-year operation cranked out 145 million lbs. zinc, 70 million lbs. lead, and 1.8 million oz. silver in 2003.
Proven and probable reserves are estimated at 9.5 million tonnes averaging 9.8% zinc, 4.8% lead and 97 grams silver per tonne. The total measured, indicated and inferred resource is pegged at 10.4 million tonnes of 9.7% zinc, 3.9% lead and 94 grams silver. Additional indicated and inferred copper resources stand at 3.5 million tonnes grading 3.1% copper, 0.4% zinc, and 49 grams silver. The resources are reported exclusive of reserves, and the reserve figures include estimated mining dilution and are exclusive of stope pillars.
South Atlantic will spend US$100 million in cash plus payments for working capital and a US$1 million non-refundable deposit. In addition, the junior will pay to Rio Tinto a maximum of US$5 million in price participation payments based on the performance of zinc, lead and silver prices for a period of up to two years.
“Strength has returned to global base metal equities, and the market is experiencing strong performance in base metal prices,” says Ted Posey, president of South Atlantic. “The acquisition of the Zinkgruvan mine provides a timely investment opportunity for South Atlantic.”
South Atlantic has almost completed its due diligence, and the deal is expected to close in the second quarter of 2004.
The current mine plan estimates a 19-year mine life based on reserves and resources. South Atlantic believes there is significant potential for expanding the mine.
Taking into account its 38% interest in the Storliden mine, also in Sweden, South Atlantic is expected to produce more than 170 million lbs. zinc, and 10 million lbs. copper in 2004.
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