Cassiar agrees to develop Quebec graphite deposit

This time the Vancouver-based company has its sights on the Lac Knife graphite project in Quebec owned by Societe d’Exploration Miniere Mazarin (ME). The deposit is 37 km south of Fermont near the Quebec-Labrador border and not far from the Mount Wright iron mine. Graphite is used in a variety of applications, the principal application being refractories and crucibles.

Cassiar was known primarily as a producer of asbestos fibre, but that changed when the company made its acquisition of Similco Mines in mid-1988. Similco’s key asset was the Similkameen copper mining operation near Princeton, B.C. The bargain-priced takeover provided Cassiar with a timely and profitable diversification into copper and precious metals.

Having paid off the Similco acquisition in just over a year, it was no secret Cassiar was shopping for another mining venture that would fully ensure its status as a diversified company.

Under the terms of the agreement with Mazarin, Cassiar plans to invest $9 million in the graphite project and be responsible for arranging the balance of the $32 million in development capital required to achieve production. Cassiar will also buy $5 million in Mazarin shares over two years.

Regis Labeaume, president of Mazarin, said the company was in serious negotiations with three other companies, one of which was American, for a possible joint venture on the project.

“People thought we would go with a major company,” he said. “But we are very happy to make the deal with Cassiar. They are good operators and good businessmen.

“This is an industrial mineral that needs to be marketed and Cassiar has marketing people in 45 countries,” he added. Labeaume also noted that the project has no infrastructure problems and is in an area with mining services and an experienced workforce.

The Lac Knife project contains some 8.1 million tonnes of open pit reserves averaging about 17% flake graphite. Development work is expected to begin this spring, and full production in mid-1991.

The project would be operated through a new jointly owned company with its headquarters in Quebec City and equal representation from Cassiar and Mazarin on the board of directors. Special provisions in the agreement give Cassiar control of the project until outside financing and half Cassiar’s investment has been recovered.

Initial production is planned at 23,000 tonnes of flake graphite annually, with existing reserves sufficient for over 30 years.

On the corporate side, Cassiar expects to complete soon a reorganization that will result in Princeton Mining becoming the new parent company of Cassiar and other companies in the Cassiar group. Cassiar also owns about 20% of Rea Gold (TSE) which owns a 30% interest plus 5% net smelter return in the producing Samatosum mine near Barriere, B.C.

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