Capstone Mining Corp. announced plans Wednesday to sell the Minto Mine to an upstart company, Pembridge Resources, listed on the London Stock Exchange.
Capstone vice-president Cindy Burnett told the Star this morning she understands Pembridge intends to continue operations as they are, with no plans to cut the existing the workforce.
Rather, Burnett emphasized, the company is looking to come in and expand the life of the copper mine, as well as pursue other opportunities.
She said Pembridge has a couple of people who are familiar with the Minto property.
Pembridge believes it can bring a new approach to the mine plan, Burnett suggested.
“They are very optimistic about the future of Minto.”
The sale will include a cash payment of US $37.5 million, plus the standard adjustments on the day of closing for assets like ore on the property that had been mined but not sold and still belongs to Capstone.
Capstone will also receive 9.9 per cent of the $50 million in shares Pembridge intends to sell initially, Capstone said in a press release.
“So we will own 10 per cent of Pembridge,” Burnett said.
The sale is scheduled to close before the end of June.
There are currently 146 Capstone employees working at the Minto Mine and another 141 contract workers. They include employees of Pelly Construction Ltd. of Whitehorse, which is responsible for the open pit mining.
The Minto Mine began producing in 2007 under Sherwood Copper Corp. Capstone purchased Sherwood to form a single company in 2008.
Capstone had planned to halt production at the Minto Mine late last year and put it into a state of care and maintenance.
As commodity prices for copper rose, it decided to continue operations and subsequently invested money preparing for further open pit mining.
It was planning to continue operations to mid-2021.
The price of copper was hovering this morning near a four-year high, trading at US$3.21 per pound.
In a press release issued by Pembridge today, company CEO David Linsley says:
“We believe Minto is an exceptional opportunity with the potential to benefit not only our shareholders but also the local and wider community for many years to come.
“We look forward to engaging with and working closely alongside the Selkirk First Nation, the various local communities, the Yukon government and the substantial workforce at the mine.”
The release goes on to say as soon as the sale closes, “Pembridge management will implement a number of strategies to seek to significantly extend the current four-year mine plan.”
The arrangement also requires Capstone to maintain one-third of the $72-million reclamation bond – $24 million – for one year after the closing date, if Pembridge asks it to.
“The divestiture of Minto will allow us to focus our resources on opportunities that will have a more meaningful impact on the long-term growth of the company,” Darren Pylot, president and CEO of Capstone, says in Wednesday’s press release.
“This agreement is consistent with our continuing efforts to deliver shareholder value by focusing on our core assets and allows us to further strengthen our balance sheet.
“Minto has been an important part of the development of Capstone, and we are optimistic for the future of Minto under Pembridge’s stewardship.”
Burnett said Pembridge approached Capstone about the purchase of the Minto Mine a number of months ago.
Pembridge, she said, is a startup that wants to focus on mining.
“These are serious miners,” she said.
“We satisfied ourselves that they have access to significant financial backing to go through with this.... I think they are pretty excited about the future.”