SRA makes comeback in Portugal

Failed zinc miner Strategic Resource Acquisition (SRA) (SRZ. H-V) has emerged from bankruptcy protection and signed a deal to acquire gold and base metals projects in Portugal.

SRA plans to buy the Portuguese subsidiary of bankrupt Redcorp Ventures, a company that’s also familiar with the Companies’ Creditors Arrangement Act.

Redcorp ran into trouble in early 2009 when debt pressures and construction delays at its Tulsequah polymetallic project in northwestern British Columbia forced the company to file for bankruptcy protection. It’s now in receivership. SRA shut down its Mid-Tennessee zinc mine in 2008, after just six months of production and investing $150 million due to low zinc prices and production issues.

But the two companies share more in their history than financial woes, says SRA executive vice-president Terence Chandler, who is the former president of Redcorp. Chandler and SRA president Victor Wyprysky considered joining forces in 2007.

“There was an opportunity to consider a merger down the road for the two companies to build a larger company,” Chandler explains. “That didn’t happen, I would say largely because of the debt covenants involved that made it very restrictive.”

When Redcorp went under last year, Chandler started consulting for SRA just as Wyprysky was preparing for a comeback.

Chandler says buying Redcorp’s Portugal projects was partly opportunistic.

“And it’s in a good environment, a politically stable area,” he says. “There are number of projects on the Portugal and Spanish side of border that are very large.”

Under the deal, SRA will acquire the Lagoa Salgada polymetallic massive sulphide project located at the northwest extension of the Iberian Pyrite belt. The project has an inferred resource totaling 2.02 million tonnes grading 0.35% copper, 4.83% lead, 5.13% zinc, 1.29 grams gold per tonne and 85.35 grams silver.

The company will also take on the Vila de Rei gold project in central Portugal where gold mineralization occurs in persistent quartz vein systems up to 15 metres in width and in breccia zones associated with late granitic intrusives.

Redcorp only did enough work on the projects to keep the licences in good standing because its focus was bringing Tulsequah into production.

The price tag on the projects has yet to be disclosed, but Chandler says that SRA is getting a “reasonable price.”

“It’s still relatively advanced with good upside potential and it gives us the wherewithal to continue looking at and acquiring other projects,” Chandler says. “We don’t intend to stop at Portugal.”

He said there were some discussions of picking up the Tulsequah project, but it was decided the project is too advanced for SRA at this time.

“It’s out of our reach,” Chandler says.

The deal is subject to regulatory approval and the company will need to do a financing to complete the purchase.

SRA shares were trading up half a cent to 1.5¢ apiece at presstime on a trading volume of 2.9 million shares. The company has 39.1 million net shares outstanding and a 52-week trading range between 0.5¢-4.5¢.