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Message: Sad end for a Quebec mining success
Triste fin pour un succès minier québécois
It was a great story to success, so rare in Quebec. A small business of mineral exploration in the Abitibi region which falls on the good vein and who succeeds to a mine in joining Glencore Xstrata. And she just lose everything at the moment where it could begin to recover its investment.
Donner Metals has abandoned the part at the beginning of the month and made its 35% share in zinc mine Bracemac-McLeod, Matagami, that it had discovered in 2006.
"It's sad. ' C' was an extremely difficult decision for the company ", said its president and Chief Financial Officer, Normand Champigny, in an interview with La Presse Affaires.
Give no longer had the funds to pay its share of the expenditures of the mine, he said. In July, the company has missed the first of the instalments was committed to, or 4.3 million. A few weeks later, she ended up resolve to give up its stake in the mine, after there have invested 60 million, to comply with the agreements linking the partners.
Normand Champigny says hitting on every door to get the funding that was missing. "It made a huge effort," he says.
Nobody responded to this ultimate call to give. The solidarity fund or the Caisse de dépôt et placement, or Investissement Québec, which were in turn solicited wanted back hand in their pocket, at the risk of losing their implementation.
The losses are heavy. For shareholders above all, which have financed exploration work and supported giving until the opening of the mine in may: 60 million spent.
The action of give is worth more than half a cent since it has lost its reason for being. The Caisse de dépôt had 10 million shares at December 31 last, which she estimated at 1.7 million. Investissement Québec had a loan of 5 million in March.
Excessive optimism?
Donner Metals has lost everything, but the mine, built according to the budget and schedule planned, continues its operations under the leadership of the giant Glencore. How can we explain that an also successful mining project could ending also abruptly to give?
Its president blames neither Glencore nor any of its partners. "It is a combination of circumstances," he said.
The output of the mine at the beginning of its activities has been below expectations, according to him. The zinc content was also lower than expected. And the price of the metal has fallen from almost $ 1.00 a pound at the beginning of the year to 86 cents. C' was fatal to give, which had neither the size nor Glencore borrowing capacity to wait for better days.
Normand Champigny blame nobody, but he acknowledges that his company perhaps sinned by excess of optimism. "It might have been more conservative on the metal prices and the performance of the mine," he says.
The Director general of Sidex, Michel Champagne, believes that giving had a bit too much "stretched its capital structure. She had amputated his future income, explains the head of the joint venture of the Government of Québec and the Fonds de solidarité formed to encourage mineral exploration in Quebec.
In fact, at the end of its last financial year, in February 2013, Donner Metals posted a loss of $ 5.2 million and an accumulated deficit of 37.7 million.
SIDEX knows well give for having supported her financially before even the discovery that would lead to the mine Bracemac-McLeod. Its mandate does not allow it to invest in projects once they are returned to the commercial stage. It then passes the torch to others, such as the solidarity fund or the Caisse de dépôt.
SIDEX will lose a little money in the discomfiture of give, but not much, said Michel Champagne. "It's a shame for the shareholders, but the rest mine, and Québec continues to benefit from its activities," he says.
Donner Metals still exists and would like to start from scratch with the mining properties that remains. "We'll see what they offer us", says Executive Director of Sidex, who expects that the management of the company overtype on her door shortly.
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