BALMAT A plan between Beaufield Resources and HudBay Minerals for the purchase of St. Lawrence Zinc is dead but Beaufields former president, who was fired, is trying to broker a deal through a different company because he still thinks reopening the mine makes sense.
Im busy right now trying to arrange financing and then go back to HudBay, Kevin D. Weston said. I think the projects good.
Beaufield, a Montreal company, announced in February that it wanted to buy the mine from HudBay, another Canadian company, with the intention of reopening it.
Beaufield, historically a pure exploration company, hired Mr. Weston in November as president and chief executive officer, and tasked him with changing the way the company did business to create value for its shareholders.
The acquisition of Balmat was to have taken the company in a direction that would include both operations and exploration, according to the press release the company issued when it announced its plans to buy the Balmat operation.
A month after announcing an exclusivity agreement and non-binding letter of intent with HudBay to purchase Balmat Holding Corp. for $12 million Canadian and up to $2 million in stock equity, Beaufield reversed course.
Beaufield announces that due to the current financial and market conditions for resource companies its board of directors has decided to terminate the Balmat zinc mine due diligence process and has notified HudBay accordingly, the companys press release said. As a consequence of Beaufields decision to resume an exploration, development focus, the company terminated its president and CEO, Kevin Westons contract and Mr. Weston has resigned as director of the company.
Mr. Weston said the press release speaks for itself from Beaufields point of view.
Maybe it didnt fit with what Beaufield is comfortable with, he said.
John Vincic, HudBay vice president for investor relations and corporate communications, had little comment beyond that Beaufield had notified it that it did not want to proceed with the transaction.
Well continue to consider strategic alternatives, Mr. Vincic said.
News of the deal dissolution surprised Fowler Supervisor Michael J. Cappellino, who met with Mr. Weston Thursday.
He was very enthusiastic about it. Im kind of shocked, Mr. Cappellino said. They didnt even do a month or two of digging into this. Im very disappointed they stopped it this fast. Maybe itll turn around.
Mr. Weston said he liked the Balmat property because it could be put back in production in short order at a time when global zinc supplies are shrinking and a number of large mines have closed.
The price for zinc is around 98 cents per pound.
The price had risen to $2.03 per pound when HudBay reopened the mine in 2006 and then dropped to 81 cents per pound when the company closed it in 2008. When Zinc Corporation of America shut down operations in 2001, the price of zinc was 32 cents per pound.