Balmat Zinc Mine Unlikely To Reopen

The zinc mine at Balmat, NY, isn't likely to reopen soon regardless of the outcome of a possible shakeup at the top at HudBay Minerals, the parent company of St. Lawrence Zinc.

According to some media reports, Peter R. Jones, a former HudBay chief executive vying for the job again if top shareholder SRM Global Master Fund succeeds in replacing the company's board, suggested restarting Balmat along with another of HudBay's closed mines.

But Mr. Jones said HudBay executives are misrepresenting his views to divert attention from other issues.

"I said we would review all shut-down facilities and see if they could be reopened. There's no commitment," Mr. Jones said. "Balmat was designed to be open during good times and closed in bad. It's a swing producer. It's unlikely in our current market to be reopened."

Mr. Jones was chief executive officer of HudBay when Balmat was reopened in 2006. He was replaced by Allen Palmiere in January 2008. Mr. Palmiere stepped down after a botched attempt to take over Canadian rival Lundin Mining.

The deal fell apart after the Ontario Securities Commission decided HudBay would need shareholder approval to issue the stock it was using to buy Lundin. The bid stirred stockholder passions and ignited the proxy war that could result in the return of Mr. Jones, the choice of SRM.

"The stockholders have lost faith and there's been a revolt," Mr. Jones said. "They want the board 100 percent replaced."

Mr. Jones, chief executive officer of Adanac Molybdenum Corp., Surrey, British Columbia, predicted global zinc supplies will continue to build or flatten, at best, over the next few months because of the world economic slowdown.

Reopening Balmat under such conditions would be challenging.

The price of zinc is 55 cents per pound. Zinc sold at about $2 per pound when HudBay reopened the mine. It was at 81 cents a pound when HudBay closed the mine in 2008.

Balmat is considered a high-cost producer because it is a deep shaft mine that has a single product.

"It's relatively low-grade, meaning the pounds of zinc in each ton of ore is relatively low," Mr. Jones said.

Source Watertown Daily Times/Trading Markets