BcMetals hits more Red Chris snags
Junior moves ahead with ambitious copper-gold project, despite local protests, unsolicited takeover bid from Imperial Metals
Last updated 9/24/2006 at Noon
No sooner than clearing an infrastructure hurdle to development of its Red Chris copper-gold project in northern British Columbia this year, bcMetals Corp. encountered another obstacle in the form of a blockade against road access to the property by a small group of local residents.
The Vancouver, B.C., junior mining company went to court and won an injunction to clear the blockade earlier in September only to find itself the target of a potentially hostile takeover offer from Imperial Metals Corp., another small Vancouver, B.C., mining company.
Located 280 miles north of Smithers, B.C., and 11 miles southeast of the village of Iskut, Red Chris would be an open pit mine that would employ about 250 people full-time during operations. The capital cost of building the mine is estimated at C$200 million and annual spending on operations would total about C$70 million.
Unlike many projects, where junior mining companies enter into partnerships or sell their properties to larger companies, bcMetals intends to develop and operate the Red Chris mine on its own.
The mine plan calls for processing 27,500 metric tons of ore per day over a projected mine life of 18 years, according documents filed with the B.C. government.
The project will require cooperation with the First Nations in the region, the Tahltan and the Iskut, with whom bcMetals signed a memorandum of understanding in January 2004. Dissident members of the Iskut, however, launched the blockade in June, protesting what they call a lack of adequate community oversight of the project.
BcMetals said Sept. 1 that the British Columbia Supreme Court granted an injunction and enforcement order, restraining and enjoining the dissident group from blocking the Ealue Lake Road and preventing bcMetals' access to its Red Chris property.
Once access was restored, the company began its previously announced drilling program.
BcMetals moved an excavator and a drill rig onto the property Sept 9. In the process, the company and its contractors forded a small stream known as Coyote Creek.
Despite various environmental protection measures taken by bcMetals, including placing hydrocarbon booms around the equipment, a small amount of grease and other hydrocarbons (estimated by the company to be less than half of one liter) washed off the drilling rig into the water. A portion of this material escaped the booms.
BcMetals said it notified regulators and would test water in the creek to ensure that there has been no impact on the environment. In addition, the company said it will undertake any clean-up work necessary to rectify the situation.
The Iskut protestors, meanwhile, charged the company with bringing to life their worst nightmares.
"Today's oil spill is our worst nightmare coming true," said Rhoda Quock, a spokeswoman for the Iskut elders group Klabona Keepers. "It shows what happens to our lands when development is rammed through without proper consultation."
Considers takeover bid
Imperial Metals, meanwhile, announced an offer Sept. 8 to purchase bcMetals' outstanding shares for 95 cents a share in cash. Imperial Metals, a production and exploration company in Western Canada and the United States, said the unsolicited bid represented a 46 percent premium over the average closing price for the 20 trading days that ended Sept. 7.
Imperial Metals currently owns about 1.15 million common shares, or 3.1 percent, of bcMetals' stock.
Imperial Metals said the purchase offer is expected to remain open for 35 days following the date of a mailing it would send to bcMetals shareholders. The offer is also subject to the approval of regulators.
The board of directors of bcMetals met Sept. 8 to consider the unsolicited offer, and announced plans to retain financial advisors to assist in evaluating the bid and considering alternatives available to the company.
BcMetals also urged its shareholders not to take any action regarding the offer until the company completes an analysis.
Imperial Metals owns the Mount Polley open pit copper-gold producing mine (100 percent interest) in central British Columbia, the Huckleberry open pit copper-molybdenum producing mine (50 percent interest) in northern British Columbia and the development stage Sterling gold mine (100 percent interest) in southwest Nevada.