Yukon’s only active hard rock mine is slated to be sold.
Capstone Mining is preparing to sell its Minto mine to Pembridge Resources, a company based in the U.K.
The deal, worth US$37.5 million and 9.9 per cent of Pembridge’s shares, is expected to be finalized in April.
“We have plans for the mine. We think that we’ll be able to significantly extend the mine life,” said Pembridge CEO David Linsley.
“I know there’s been a lot of feelings up there for the past few years that it’s close to closing down. Well, we’re not buying this thing to close it down.”
Under Capstone, Minto was expected to close around 2021.
Linsley won’t go into detail about how he intends to extend that mine life or how long he thinks the mine could be operational.
In a statement the company said no exploration activities have been undertaken on the Minto property since 2012. A number of prospective exploration targets have been identified and will require drilling, it said.
“You don’t drill the whole deposit out, because that’s too expensive. You’re constantly drilling ahead of yourself,” Linsley said.
Linsley said he believes there are also ways to make Minto more efficient.
“That’s no criticism of Capstone, it’s just the way we’re going to do things. We’re going to be clearly very focused on costs. I think we can get costs down,” he said.
“I wouldn’t be buying it if I thought costs were going up. That’s work that we’re working on at the moment. We’ve done our due diligence, we can see the opportunity, but that has to be refined in the coming months.”
But being more efficient won’t mean job losses, he said.
“If you just cut the workforce, then who’s going to mine the mine? It’s not that simple…. You need the people there in order for it to succeed.”
Capstone’s senior vice-president Gregg Bush said that selling the mine will allow Capstone to focus on other assets.
“We believe there’s potential with Minto, as do the people with Pembridge, but we made the decision to focus our energy and our capital on core assets.”
Currently the mine produces approximately 50,000 tonnes annually of highly quality copper concentrate containing 18,000 tonnes of copper, with gold and silver as by-products, according to Pembridge.
Minto will be Pembridge’s only mine.
The company is made up of people with extensive experience in mining, Linsley said. Members of the board are familiar with Minto, including one board member who used to work for Capstone, he said.
Linsley said Pembridge approached Capstone about selling because it saw a “significant upside.”
“We think that … this mine could run for many many years to come,” he said.
Having a new owner for Minto is exciting, said Samson Hartland, the executive director of the Yukon Chamber of Mines.
“If an investor is coming in at this stage of a project they’re going to look to create value out of it, they’re going to look to extend the life of the mine,” he said.
Hartland said getting more use out of Minto will mean more jobs for contractors and the surrounding communities.
“When they’ve put the project on hold a couple of times over the years, we all hurt, we all suffer as a result,” he said.
“When we hear stories on the other end talking about extending the life of the mine, and talking about continuing operations … that’s positive for everyone involved.”
Contact Ashley Joannou at firstname.lastname@example.org