Zinc miner SRA files for bankruptcy protection
reuters.com
Thu Jan 15, 2009 1:21pm EST
TORONTO, Jan 15 (Reuters) - Strategic Resource Acquisition SRZh.V said on Thursday it had filed for bankruptcy protection as a plunge in metals prices and tight credit conditions left the zinc miner unable to pay its bills.
Toronto-based SRA said it and its U.S. subsidiary, Mid-Tennessee Zinc Corp, have filed for U.S. Chapter 11 protection, and said it was also seeking protection in Canada under the Companies' Creditors Arrangement Act.
If granted, this will stop creditors and suppliers from enforcing any rights against the company as it develops a restructuring plan.
"SRA and MTZ have sought protection as their current cash in hand is insufficient to meet their current obligations," the company said in a statement.
Shares of the company, which traded at C$6.88 as recently as July 2007, had fallen to one-half of a Canadian cent as of Thursday, giving the company a market capitalization of just C$200,000 ($159,000).
A deteriorating market forced SRA to put its Gordonsville zinc mine complex on care and maintenance in October and to stop construction of its Cumberland and Elmwood mines. All the mines are in Tennessee and all were once owned by now-defunct Pasminco of Australia.
Last week, the company said it had failed to make interest payments on its Series 1 and Series 2 notes.
Zinc peaked above $2 a pound in late 2006, but slumped below 50 cents a pound around the time the credit crisis hit full stride last November. The metal MZN3 was around 57 cents a pound on Thursday, well below operating costs at Gordonsville.
Combined, the three mines were expected to eventually produce as much as 150 million pounds of payable zinc a year.
($1=$1.26 Canadian) (Reporting by Cameron French; editing by Peter Galloway)
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