Silvermet Signs Agreement to Acquire Metoks Zinc Processing Facility in Turkeyadmin
Silvermet Inc. has entered into an Agreement to acquire Metoks Madencilik Metalurji Tasimacilik Sanayi ve Ticaret A.S. (“Metoks”), the owner of a Waelz kiln in Turkey that processes electric arc furnace dust (“EAFD”) to recover its zinc content. The purchase price is US $9 million. Silvermet will assume the Metoks liabilities of US $4.9 million and the balance of US $4.1 million will be paid to the owners of Metoks over 5 years. The Agreement is subject to Silvermet’s Board of Directors approval and completion of satisfactory due diligence. Silvermet’s acquisition of Metoks is expected to close by January 31, 2009.
Metoks completed the construction of its Waelz kiln and began operations in January, 2008. Commissioning was completed in April. However, because of the overhang of significant debt incurred to construct the kiln and the related debt servicing costs, the need for working capital and the decline in zinc prices, Metoks faced cash flow problems and closed its operations in September, 2008.
The Metoks Waelz kiln has a capacity to process 60,000 tonnes of EAFD per annum to produce approximately 12,000 tonnes of zinc contained in zinc calcine oxide concentrate. If market conditions warrant, this concentrate can be further processed into a zinc clinker, thus separating its lead content, to result in approximately 1,100 tonnes per annum of lead in lead oxide concentrate plus silver credits. Management of Silvermet believes the Metoks plant will contribute positively to operating income at current zinc and lead prices.
Metoks is located adjacent to three existing electric arc furnace (“EAF”) steel plants on the Mediterranean coast in the Iskenderun Bay. These EAF steel plants produce approximately 60,000 tonnes EAFD per annum. Three new EAF steel plants are presently under construction in the Iskenderun area and are expected to produce a further 60,000 to 80,000 tonnes EAFD per annum. The new EAF plants will be operational by mid-2010. Management of Metoks has developed plans that provide sufficient space on the Metoks land to construct a second Waelz kiln to service the growing supply of EAFD in the Iskenderun region.
A number of other EAF plants have been in the planning stage for the Iskenderun region, which is also experiencing the establishment of a number of new industries, including a shipyard, a container terminal, automotive related plants, and refineries. Iskenderun is ideally situated at the eastern part of the Mediterranean with deep water ports. Furthermore, this also services the oil industry, since the major Ceyhan pipeline from Georgia terminates in Iskenderun Bay.
Assuming completion of satisfactory due diligence, Silvermet expects to restart the operation of the Metoks Waelz kiln by the end of February, 2009.
Stephen Roman, Silvermet’s President & CEO, stated: “The acquisition of Metoks is a major step forward in Silvermet’s strategy to establish itself as an EAFD processor in Turkey. With the acquisition of this plant, we will immediately move to production status with a capable Turkish management and operating team. The EAFD business in this region has significant growth potential and can produce zinc at very attractive costs.”
Silvermet Inc. is an exploration and development company presently focused on developing a zinc processing business in Turkey and exploring for nickel-copper-platinum group metals at its Muskox project located in Nunavut, Canada.