Mines McWatters Restarts Operations at the Sigma-Lamaque Complex
SOQUEM invests more than 16 million dollars in the project
Val D’Or, June 27, 2002 - The President and Chief Executive Officer of McWatters Mines Inc., Claire Derome, and the Chairman of the Board, President and Chief Executive Officer of the Société générale de financement du Québec, Claude Blanchet, announced officially today the restart of operations at the Sigma-Lamaque Complex, made possible by a financing round of more than 47 million dollars. SOQUEM INC. has invested a total of 15.8 million dollars in the Sigma-Lamaque Limited Partnership (SLLP). The SLLP owns the Sigma‑Lamaque Complex and McWatters is the operator on behalf of the SLLP.
SOQUEM acquired a 40% interest in the SLLP for an investment of 10 million dollars, and contributed an additional 5.8 million dollars to SLLP’s working capital. McWatters holds a 60% interest in the SLLP and contributed $8.8 million toward working capital. Financing of the SLLP is completed by a 17 million dollar loan from Investissement Québec, and an interest-free 2.6 million dollar loan from Canada Economic Development. To complete its financial restructuring, McWatters also secured funding with a 12 million dollar issue of Gold-Linked Convertible Debentures to shareholders. SOQUEM took a $500,000 share in this funding.
During explorations carried out after it acquired the property, McWatters discovered large surface deposits of gold that can be extracted at lower cost. The company had already begun open pit operations on certain gold‑bearing deposits of the Sigma mine. In the light of conclusive results, McWatters undertook a program to sink test holes, compile data and review the information for the entire Sigma-Lamaque Complex.
Due mainly to the depressed gold market and other difficulties encountered in converting the Sigma mine from underground extraction to a much less costly open pit operation, McWatters was forced to seek protection under the Companies’ Creditors Arrangement Act in February 2001.
McWatters’ restructuring is now complete and the Company’s balance sheet is solid. After exhaustive analysis, proven reserves call for mining operations to continue for the next seven years. Furthermore, profitability studies are based on a gold price of US$270 per ounce. Development work on open pit operations has already begun, and production at the Sigma mine is projected to start in the fourth quarter of 2002.
Already, some 90 construction workers are involved in laying out the site, joining the 40 McWatters’ employees assigned to the pre-production work and the 15 others currently in training. Once production reaches its full capacity of 5,000 tonnes of ore processed per day, about 155 people will be employed by McWatters on the site of the Sigma‑Lamaque Complex, which will mean about 150 direct and 450 indirect jobs.
“This investment is perfectly suited to SOQUEM’s development plans to take part in promoting Quebec’s mineral resources and developing the Quebec mining sector. McWatters has put together an experienced team committed to making this project a success. For Val‑d’Or and the Quebec mining industry, this is wonderful news,” declared Claude Blanchet.
“The support that the Quebec government has given the mining industry, and that McWatters has put to good use, has made all the difference to our being able to restart operations at the Sigma-Lamaque Complex. The involvement on the part of the community of Val‑d’Or, our employees and our shareholders has also been crucial. Sigma has been in operation for 65 years this year, and we have every reason to believe we’ll be celebrating many more anniversaries,” affirmed Claire Derome.
SOQUEM, a subsidiary of SGF Mineral, is a mining exploration company created in 1965. SOQUEM carries out exploration and development activities in projects in the gold, base metal, and industrial minerals sectors. SGF Mineral is a subsidiary of the Société générale de financement du Québec, whose mission is to implement economic development projects together with partners under normal profitability conditions. Since it was restructured in 1998, SGF has generated nearly 7.5 billion dollars in investment, and created over 19,400 thousand direct and indirect jobs in projects that have reached the operational phase, not counting the thousands of jobs generated during the construction phase. As at December 31, 2001, SGF’s consolidated assets exceeded 3 billion dollars. SGF has 57 international partners operating establishments in Quebec. (sgfqc.com)
McWatters Mines is a major Canadian gold producer with reserves of one million ounces of gold, and reserves and resources totalling 4.9 million ounces. The Company is involved in the development and opening minning of the Sigma-Lamaque complex. For more information, visit our Web site at (www.mcwatters.com).
President and Chief Executive Officer