NEW MINING COMPANY IS FORMED

 

Progress towards commercial tin production at the South Crofty tin mine in Cornwall will be accelerated following the formation today (November 2) of a new mining company.

 

Western United Mines Limited is a newly formed company which will own and operate the South Crofty tin mine. Baseresult Holdings Ltd, which bought South Crofty in 2001, is the majority shareholder in Western United Mines Ltd alongside Cassiterite LP, an investment vehicle that is acting for, amongst others, Galena Asset Management Ltd., a subsidiary of global commodity trader Trafigura Beheer.

 

The move, which formally takes effect on Friday 2 November 2007, will boost the economy of the Camborne, Pool, Redruth area of Cornwall which suffered when South Crofty, the county’s last working tin mine, closed in 1998. With new investment, management expertise and experience at board level, the work to resume tin production over the next two years will play a key role in local regeneration.

 

In excess of £3.5 million will be spent by June 2008 on continuing the mine development. Tunnelling and exploration drilling activities begun by Baseresult earlier this year will continue with this injection of fresh capital bringing the total investment by that date to £9 million. The further £50 million of investment required by the time the mine starts production, which is projected for the end of 2009, has been earmarked. Staffing levels have already increased from 17 to 26 and, by July 2008, that figure is expected to have risen to 35 full-time employees.

 

Local businesses have already been benefiting from the renewed activity at South Crofty. Orders worth more than £300,000 have been placed locally – including one for a drilling machine that is being built by a Camborne firm, Drillserve Ltd. That figure is set to increase as more equipment is purchased over the next few months.

 

Christopher Hall, an experienced mining finance and investment specialist, is the independent non-executive chairman of the Western United Mines board.  Currently mining adviser to Grant Thornton LLP, Mr Hall’s 30 year career has spanned mine geology, mining share analysis, specialist fund management, mergers and acquisitions, establishment and management of an AIM listed mining finance company and wide-ranging consultancy.

 

Christopher Hall said: “I am delighted to renew my association with South Crofty after some 20 years.  The mine always suffered from a shortage of investment in exploration in the past. The vision of Baseresult, the financial strength and market expertise of its new partner Galena, and the undeveloped potential of the South Crofty tin deposits look like a winning combination.  I look forward to helping to guide the project back into production for the benefit of the shareholders, the workforce and the Cornish economy.”

 

The board’s executive members are Kevin Williams, Managing Director of Mine Operations, Alan Shoesmith, Acting Chief Executive Officer and Financial Director, and David Stone, Director of Engineering.  The executive members previously held similar positions on the board of Baseresult Holdings Ltd.

 

Kevin Williams said: “When we bought South Crofty in 2001 we made our commitment to redeveloping it as a working tin mine very clear. Experience tells us that we should be able to resume full tin production and that there is potential for a mining life of eighty years.  The tin price has moved ahead strongly since the purchase and we are delighted that we pressed ahead with our plans. 

 

“Today’s events effectively underwrite the mine’s funding for the future.  We have the expertise, we have the passion and now we have added the financial strength of our new partner to the picture. This should be seen as a great day – not just for Cornwall but also for UK industry.”

 

The board’s remaining non-executive members are Mark Thompson, Chief Investment Officer with Galena Asset Management, a subsidiary of Trafigura Beheer b.v, one of the world’s largest international commodity traders, and Gerard Lynch, Galena Asset Management’s Finance Officer.

 

Mr Thompson said: “South Crofty closed in 1998 when the tin price was less than a third of the current level. New uses for tin, particularly in lead-free solder, will keep prices buoyant for many years to come and make an investment in tin mining a very attractive proposition. The experience of the management and the support for mining from the local community have been key in our decision to make a long term commitment to this project.”