Nyrstar agrees to acquire an 85% interest in Coricancha mine in Peru
Balen, Belgium (1 October 2009) - Nyrstar NV today announced that it
has agreed to acquire an 85% interest in the Coricancha mine in Peru
for US$15 million in cash from Gold Hawk Resources Inc (TSX-V:CGK)
(Gold Hawk). Gold Hawk, a publicly listed Canadian based mining
company, will retain a 15% interest.
The Coricancha mine is a poly-metallic mine with more than 60 years
of operating history and currently comprises a 600-tonne per day ore
processing facility, underground mine and reserves and resources
containing zinc, lead, copper, gold and silver. The mine is located
(approximately) 90 kilometres east of Lima, Peru in close proximity
to a number of other significant mining operations and exploration
properties. Operations at the mine have been suspended since May
2008 (see further below).
Once operations are recommenced, the expanded operations (see further
below) are expected to produce annually (approximately) 20,000 dry
metric tonnes (dmt) of zinc concentrate, 15,000 dmt of lead
concentrate, 45,000 troy oz of gold and 2.4 million troy oz of
silver[1]. In addition, it is estimated that the existing tailings
facility contains (approximately) 35,000 troy oz of recoverable gold.
The zinc concentrate will be suitable for treatment at Nyrstar's
Hobart (AUS) and European smelters. The lead concentrate is a
complex concentrate high in precious metals and therefore well suited
for treatment at Nyrstar's Port Pirie (AUS) lead smelter.
Exploration at the mine by previous owners has been limited, with no
modern exploration having been undertaken (e.g. diamond drilling,
geochemical and/or geophysical exploration). Nyrstar intends to
pursue an exploration program that is expected to significantly
increase mineral resources and reserves and also move a significant
portion of mineral resources into the proven and probable categories
as development continues.
The acquisition remains subject to Gold Hawk shareholder approval.
Gold Hawk intends to convene a shareholders' meeting during October
2009 seeking the requisite approvals. Subject to Gold Hawk receiving
shareholder approval, completion of the acquisition is expected to
occur during H2 2009. The Board of Gold Hawk will recommend the
transaction to its shareholders.
Commenting on the acquisition, Roland Junck, chief executive officer
of Nyrstar, stated:
"Consistent with our strategy, once the mine is operational, this
transaction enables us to expand our multi-metals business in markets
where we have expertise and proven capability, namely zinc, lead,
copper, gold and silver.
We believe that the mine offers significant potential for improved
and expanded production. To date this potential has remained largely
unexplored due to restricted access to capital and limited historical
exploration programs.
Our strong financial position has enabled us to take advantage of
this opportunity and we continue to actively explore additional
opportunities."
The mine has a strong and experienced management team that will
continue to manage the day-to-day operations of the mine. The
acquisition was funded from existing cash reserves.
Background
Gold Hawk acquired the mine in March 2006 for US$12 million and
subsequently invested (approximately) US$28 million on mine and
processing plant rehabilitation and improvements. Gold Hawk commenced
commercial production at the mine in October 2007 although operations
were suspended in May 2008 following localized ground displacement at
the mine caused by a third party irrigation system. Whilst further
ground displacement was stabilized in July 2008, the mine will
require a new tailings facility prior to recommencing operations. In
the current credit environment Gold Hawk has experienced difficulties
in securing the necessary funding to construct a new tailings
facility. Accordingly, as part of the transaction, Nyrstar has also
agreed to provide a three (3) year commercial loan facility of (up
to) US$20 million to provide funding for this purpose and to
recommence the operations at the mine. Nyrstar will also assume a
parent company guarantee provided by Gold Hawk in relation to a US$13
million debt facility related to the mine. The debt facility is
currently fully drawn and expires in February 2010.
In addition, Nyrstar intends to expand the scope of the operations
(e.g. by the addition of a copper circuit to capture unrealized value
from copper contained in the ore) and the scale of operations at the
mine in order to (approximately) double the existing production
capacity. The costs associated with doing so are currently estimated
at (approximately) US$15 million. It is expected that a new tailings
facility could be constructed within (approximately) 6 months,
thereby allowing operations to recommence during H1 2010 and ramp-up
to expanded production levels by 2011.
Resources and Reserves
The following is a summary of the most recent reserve and resource
statement for the Coricancha mine prepared on behalf of the Gold Hawk
in March 2009 pursuant to NI 43-101:
+-------------------------------------------------------------------+
| Total Proven and Probable Diluted Mineral Reserve |
|-------------------------------------------------------------------|
| Resource Class | Tonnes | Au | Ag | Pb | Zn | Cu |
| | | (g/t) | (g/t) | (%) | (%) | (%) |
|--------------------+---------+-------+-------+------+------+------|
| Proven | 325,157 | 4.83 | 166.8 | 2.18 | 2.72 | 0.34 |
|--------------------+---------+-------+-------+------+------+------|
| Probable | 133,277 | 4.73 | 180.4 | 2.10 | 3.19 | 0.35 |
|--------------------+---------+-------+-------+------+------+------|
| Total Mineral | 458,434 | 4.80 | 170.7 | 2.16 | 2.86 | 0.34 |
| Reserve | | | | | | |
+-------------------------------------------------------------------+
+-------------------------------------------------------------------+
| Total Measured and Indicated Mineral Resources |
|-------------------------------------------------------------------|
| Resource Class | Tonnes | Au | Ag | Pb | Zn | Cu |
| | | (g/t) | (g/t) | (%) | (%) | (%) |
|--------------------+---------+-------+-------+------+------+------|
| Measured | 486,582 | 6.43 | 187.9 | 2.50 | 3.27 | 0.39 |
|--------------------+---------+-------+-------+------+------+------|
| Indicated | 211,736 | 6.35 | 191.5 | 2.28 | 3.48 | 0.42 |
|--------------------+---------+-------+-------+------+------+------|
| Total Mineral | 698,318 | 6.41 | 189.0 | 2.43 | 3.33 | 0.40 |
| Resource | | | | | | |
+-------------------------------------------------------------------+
+-------------------------------------------------------------------+
| Total Inferred Mineral Resources |
|-------------------------------------------------------------------|
| Resource Class | Tonnes | Au | Ag | Pb | Zn | Cu |
| | | (g/t) | (g/t) | (%) | (%) | (%) |
|------------------+-----------+-------+-------+------+------+------|
| Total Inferred | 3,911,200 | 6.50 | 261.2 | 2.56 | 3.12 | 0.35 |
| Resources | | | | | | |
+-------------------------------------------------------------------+
[1 troy oz = 31.1035 grams]
Note: NI (National Instrument) 43-101 is an internationally
recognised Canadian mineral resource classification scheme used for
the public disclosure of information relating to mineral properties.
- end -
About Nyrstar
The partner of choice in essential resources for the development of a
changing world. Nyrstar is a leading global multi-metals' business,
producing significant quantities of zinc and lead as well as other
products (including silver, gold and copper). Nyrstar is listed on
NYSE Euronext Brussels under the symbol NYR. For further information
visit the Nyrstar website, www.nyrstar.com.
[1] For comparison, in 2008 Nyrstar produced (approximately) 16,000
troy oz of gold and 14 million troy oz of silver.
Contacts
Michael Morley
Director, Legal and
External Affairs
T: +44 20 7408 8120
michael.morley@nyrstar.com
Investors
Chris James
Group Manager,
Investor Relations
T: +44 20 7408 8161
M: +44 7912 269 497
chris.james@nyrstar.com
Media
Geert Lambrechts
Manager,
Corporate Communications
T: +32 14 449 646
M: +32 473 637 892
geert.lambrechts@nyrstar.com
The full press release can be downloaded from the following link:
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