While copper prices plummet, Sherwood Copper Corp. has finalized the sale of its precious metals and expanded its mining operations.
Last week, Sherwood announced its shareholders had nearly unanimously accepted its merger with Vancouver-based Capstone Mining Corporation.
“Operationally, there will be minimal difference,” said Stephen Quin, president, CEO and director of Sherwood.
Sherwood owns 100 per cent of its subsidiary Minto, which runs a copper mine near Pelly Crossing.
Capstone currently owns a copper mine in the state of Zacatecas, Mexico.
The new company will bear Capstone’s name.
“If one mine slows, the other mine continues,” said Quin. “So you have operational risk diversification and you have a larger stream of cash flow.”
The Zacatecas mine produced 6.7 million pounds of copper between July and the end of September 2008, while the Minto mine produced 12.8 million pounds of copper in the three months ending on June 30.
Sherwood has also sold all of its precious metals from the Minto mine to Vancouver-based Silverstone Resources Corporation as of December 1st.
“We did a transaction where all of our precious metals were sold for the life of the mine,” said Quin.
Those precious metals consist of gold and silver.
Silverstone will buy all the gold and silver from the Minto mine in return for paying Sherwood an up-front price of $46.17 million. There is also a set price for each ounce of gold or silver sold which can fluctuate with the market price.
“It basically provides more capital into the company so it reduces our debt and puts the company in a better position,” said Quin.
Capstone currently has a $49.9- million investment in Silverstone.
Both Capstone and Sherwood stock prices have lost around 80 per cent of their value in the last six months.
Sherwood stock prices fell from $5.5 a share to just $1.05 a share since June.
Capstone’s shares were worth $4.5 in June, but now hover just below $1.
Capstone’s prices climbed a quarter of a dollar after the combination was finalized this week.
Contact James Munson at jamesm@yukon-news.com