Ivernia set to exploit lead deposit

Exploration company Ivernia expects that its lead prospect in Western Australia will begin full production next year.

The former 50 per cent owner of the Lisheen zinc mine in Co Tipperary has spent the last year restructuring and on developing the deposit, which it believes is positioned to exploit renewed demand for the base metal, following a sustained 20-year fall off.

Its chief executive, Mr Alan De'ath, yesterday said the company, which is 10 per cent-owned by its 2,000 Irish shareholders, expects that the lead mine, known as the Magellan deposit, will be commissioned in the last quarter of this year, and will begin full lead concentrate production in early 2005. It will also build a refinery next year. This should be ready to come on line in 2006.

Mr De'ath said Magellan will produce 154 million lbs of lead in its first year, rising to 198 million lbs once the refinery comes on line. He estimated the cost of production at a total of US$0.13 (€0.11) per lb. Lead is currently selling for $0.43 on world markets. Ivernia has a sales agency deal with Pechiney World Trade for the concentrate.

Magellan will be developed at a cost of $41 million, according to Mr De'ath. The first phase will be be fully covered by Ivernia's shareholders and its partner, Sentient Global Resources Fund, which has 49 per cent of the project. Ivernia has a 51 per cent interest in the mine and will operate it. Ivernia has warrants from investors to cover its $8.7 million share of the refinery phase costs.

Sentient is timed to exit in four to seven years' time. Ivernia has pre-emption rights on its stake and has agreed to facilitate its partner's exit. Sentient is a $170 million private equity fund backed by North American, Australian and European institutional investors.

Ivernia sold its interest in Lisheen last year to global exploration giant, Anglo American. It then floated on the Toronto Stock Exchange, and now has a market capitalisation in the region of $48 million. Anglo American and Sentient hold 8 per cent of the company. UK company, Cambrian Mining has 10 per cent and a pension fund operated by Australian airline, Qantas, has 6 per cent.

Its Irish base, which holds 10 per cent, is made up largely of private shareholders, but Mr De'ath said yesterday that the institutions held a small portion of that. The company has $14.6 million in cash and debts of $2.7 million.