Curragh Files for Court Protection

Westray writedown contributed $16,600,000 to Curragh's 1992 loss




Curragh Files for Court Protection

Intense media and political scrutiny

This wire service item is dated
March 20, 1993

Source: http://ils.unc.edu/iris/trec/ft2/htm/doc100966.htm


TORONTO: — Curragh, the Canadian lead and zinc producer, yesterday filed for court protection from its creditors after failing to overcome a succession of financial and operating setbacks. Mr Clifford Frame, chairman, said the move was "forced on us by our lack of liquidity". He said he was optimistic that Curragh would emerge from court supervision as a "healthy and successful" company.

Although Curragh plans to continue operations, it announced late last week that weak metal prices had forced it to suspend production for two months at its principal mine, the Faro lead and zinc property in the Yukon. The Sa Dena Hes mine, also in the Yukon, in which Curragh has an 88 per cent stake, has been mothballed for three months.

Curragh's problems have been compounded by the closure of its Westray coal mine in Nova Scotia since an explosion there last May killed 26 miners.

The explosion has been the subject of intense media and political scrutiny. The police are expected to announce within the next few weeks whether legal action will be taken against the mine management.

A writedown of the Westray assets contributed C$16,600,000 (US$13,100,000) to Curragh's 1992 loss of C$54,300,000. Losses in 1991 totalled C$98,300,000.

The future of both the Yukon and Nova Scotia operations is clouded by their dependence on government funding. Other mining companies strongly criticised the financial help given to Curragh in the mid-1980s which enabled it to reopen the Faro mine. Faro was owned by the debt-ridden Canadian energy group, Dome Petroleum.

Curragh is negotiating a C$34,000,000 loan guarantee from the Yukon authorities to enable it to develop a new open pit on the Faro property. It has also been seeking an injection of equity.

As part of its efforts to raise cash, it sold a minority stake last year in Asturiana de Zinc, the Spanish metals producer.

Curragh said it expected the two Yukon mines to produce 432,000 tonnes of lead and zinc concentrates this year, against a forecast 704,000 tonnes.




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