VANCOUVER — A Vancouver-based mining company says soft copper and equity markets have combined to undermine the sale of its property in central Yukon, so it plans to shut the Minto Mine until a better opportunity is found.
Capstone Mining Corp. says in a release that Pembridge Resources has been unable to arrange financing to purchase the copper mine, and the two companies have terminated the agreement announced in February.
About 200 employees and contractors will be affected as mining operations are expected to stop almost immediately and milling operations will wrap up as soon as the current ore stockpile is processed.
Capstone says only a core team of workers will stay to oversee the site and meet environmental monitoring and legal obligations while the mine is put into temporary care and maintenance.
Capstone initially agreed to sell Minto to Pembridge for US$37.5 million, plus working capital adjustments and common shares representing 9.9 per cent of the issued and outstanding shares.
Capstone had planned to use the net proceeds primarily to reduce its own outstanding borrowings but president Darren Pylot says keeping Minto in a holding pattern is an option until markets pick up.
“The decision to put Minto on care and maintenance while we seek alternatives is to preserve and maximize its value,” Pylot says in the statement Thursday.
“The team will ensure Minto can be restarted efficiently and safely once the copper and equity markets improve.”
Costs to place the mine on care and maintenance are estimated to be approximately US$5 million in each of 2018 and 2019, with ongoing costs expected to be under US$4 million annually in 2020 and later, the Capstone statement says.
Companies mentioned in this article: (TSX:CS)
The Canadian Press