SMRS to Acquire Balmat Zinc Mine, Accelerate Transformation into Production
Star Mountain Resources this morning announced its three-way definitive agreements with Northern Zinc, LLC and HudBay Minerals, Inc., which will result in Star Mountain acquiring Balmat Holding Corp., including St. Lawrence Zinc Company, LLC, and its mining operations in the Balmat mining district of St. Lawrence County, New York.
Together, these transactions will provide Star Mountain the opportunity to shift from a junior explorer into a producer in the near term. Northern Zinc, in particular, brings to Star Mountain a roster of mining industry professionals with decades of technical and managerial experience.
The total acquisition price paid to Hudbay for Balmat will be 550,000 shares of Star Mountain common stock, and up to $17 million in cash consisting of $1.0 million in cash at closing and future cash payments of up to $15.5 million. A $500,000 payment has already been made to Hudbay. Under certain conditions, Star Mountain can accelerate the acquisition payments and reduce the future cash payments to $7 million.
As part of the overall acquisition of Balmat, Star Mountain will issue to the owner of Northern Zinc 10.0 million shares of the company’s unregistered common stock and assume $1.39 million in debts.
Hudbay has held the Balmat mine on care and maintenance since suspension of operations in August of 2008, which has kept mining permits current, MSHA inspections up-to-date, and environmental controls and conditions in regulatory compliance. Star Mountain Resources reports that there are no legal or regulatory roadblocks in place to delay the reopening of mining operations.
The Balmat mining complex includes a permitted and equipped mine, a 5,000 ton per day floatation mill, an office complex, and infrastructure to enable the operation of the mine. The acquisition of Balmat includes 2,699-acres of fee simple real estate and over 50,000 acres of mineral rights within St. Lawrence and neighboring Franklin counties in New York.
“We believe there is an excellent opportunity to upgrade and extend the mineralization through additional surface and underground development and exploration,” Mark Osterberg, president and COO of Star Mountain, stated in the news release.
Joe Marchal, CEO of Star Mountain, added, “We are delighted to reach an agreement with both Northern Zinc and Hudbay to acquire the Balmat mine. The reopening plan for the mine envisioned by Northern Zinc is expected to bring a significant number of jobs to an economically distressed area of northern New York State and jumpstart Star Mountain’s growth into an outstanding new mining company. The team we’ve assembled has world class financial and mining experience that we believe will enable the company to grow into a successful global base metals mining group. I am pleased to welcome Hudbay onto the share register of Star Mountain.”
The transactions are subject to various customary closing conditions and are expected to close by October 31, 2015.
For more information, visit www.starmountainresources.com