SRA to Place MTZ Mining Complex on Care and Maintenance
Strategic Resource Acquisition Corporation announced that it will be initiating a temporary care and maintenance program at its wholly-owned Mid-Tennessee zinc mining complex (MTZ).
The decision follows an extensive evaluation of numerous scenarios and zinc pricing projections that leave little support for the continuation of operations under the current commodity pricing and credit market environments. Since production began at the Gordonsville mine in April 2008, cash costs per pound of payable zinc have been well above prevailing commodity prices. While the Company has advanced the ramp up of the Cumberland and Elmwood mines to within a few months of production start-up, the project is uneconomic at current zinc prices. A care and maintenance scenario will keep the mining assets in ready condition as the Company’s management and board pursue funding and strategic alternatives towards a workable restructuring that may enable reinstating the project when zinc prices improve and funding becomes available.
The processing plant and mine infrastructure are being prepared for the orderly suspension of all activities. Staff at the mine are being reduced to a level that will meet care and maintenance requirements while capital will be deployed for basic maintenance purposes such as dewatering of the underground areas.
SRA’s management views the MTZ mining complex as being a substantial resource should full production be achieved.
“We intend to restructure our obligations and capital requirements to facilitate restarting the operations when prudent,” commented Victor Wyprysky, President of SRA. “The Cumberland and Elmwood mines are well advanced towards start-up and we have taken Gordonsville further than it has ever produced historically. It is regrettable that the perfect storm in commodity and liquidity conditions have converged at this late stage of our ramp up.”
SRA commenced mining at Gordonsville in April 2008 producing 15 million pounds of zinc and reaching a rate of over 3,000 tons per day. Over the past eighteen months, the Company has invested approximately $150 million in the completion of a major capital investment program that revived the former 29 year producer of zinc and germanium.
