Tuesday, September 17, 1991

Cassiar Mine In Serious Trouble

By: Sarah Davidson-Star Reporter

The Cassiar asbestos mine northwestern British Columbia is facing severe financial and production problems, and mine-owner Princeton Mining Corp. refuses to rule out a shut-down.

"Yes, in fact, various options are being studied," said Lianne Gulka, the corporate relations manager for Princeton, when asked if a shut-down is possible.

"It is one of the options (they include) everything from shortening the mine life and keeping production at the same level to severely shortening the mine life."

A two-week strike in early March, problems with oversize ore at the mines new McDame underground deposit, and significant production problems lost Princeton $5 million over the second-quarter. Third-quarter information isnt available yet, but the company says a reassessment of its five-year mining and development plan should be completed within a week. Delays from the strike and the oversize ore problems caused pressure to build up at draw points (points at which ore is mined), creating a need for reinforcement of support structures. This has reduced fibre production, which together with a lower ore grade has put pressure on the companys cash flow. Princeton issued a $12 million private placement in April, raising its long-term debt from $38.5 million to $51.6 million. In addition, with a strike at the companys second mine, the Similco copper mine in B.C., the bank demanded cash collateral to secure its outstanding reclamation letter of guarantee. This depleted working capital by $3.5 million.

"The banks action, combined with the ongoing strike at Similco and low production rates at Cassiar has resulted in severe limitations on the companys cash resources," reads Princetons second-quarter report.

About 1,200 people live in Cassiar. There are 330 unionized workers and an undetermined number of contractors. A union representative was unavailable to comment on the situation.

At 39 years old, Cassiar is the second-oldest operating mine in British Columbia.

Contributed by Simone Rowlinson


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