Star Mountain Resources this morning announced its three-way
definitive agreements with Northern Zinc, LLC and HudBay Minerals, Inc., which
will result in Star Mountain acquiring Balmat Holding Corp., including St.
Lawrence Zinc Company, LLC, and its mining operations in the Balmat mining
district of St. Lawrence County, New York.
Together, these transactions will provide Star Mountain the
opportunity to shift from a junior explorer into a producer in the near term.
Northern Zinc, in particular, brings to Star Mountain a roster of mining
industry professionals with decades of technical and managerial experience.
The total acquisition price paid to Hudbay for Balmat will
be 550,000 shares of Star Mountain common stock, and up to $17 million in cash
consisting of $1.0 million in cash at closing and future cash payments of up to
$15.5 million. A $500,000 payment has already been made to Hudbay. Under
certain conditions, Star Mountain can accelerate the acquisition payments and
reduce the future cash payments to $7 million.
As part of the overall acquisition of Balmat, Star Mountain
will issue to the owner of Northern Zinc 10.0 million shares of the company’s
unregistered common stock and assume $1.39 million in debts.
Hudbay has held the Balmat mine on care and maintenance
since suspension of operations in August of 2008, which has kept mining permits
current, MSHA inspections up-to-date, and environmental controls and conditions
in regulatory compliance. Star Mountain Resources reports that there are no
legal or regulatory roadblocks in place to delay the reopening of mining
operations.
The Balmat mining complex includes a permitted and equipped
mine, a 5,000 ton per day floatation mill, an office complex, and
infrastructure to enable the operation of the mine. The acquisition of Balmat
includes 2,699-acres of fee simple real estate and over 50,000 acres of mineral
rights within St. Lawrence and neighboring Franklin counties in New York.
“We believe there is an excellent opportunity to upgrade and
extend the mineralization through additional surface and underground
development and exploration,” Mark Osterberg, president and COO of Star
Mountain, stated in the news release.
Joe Marchal, CEO of Star Mountain, added, “We are delighted
to reach an agreement with both Northern Zinc and Hudbay to acquire the Balmat
mine. The reopening plan for the mine envisioned by Northern Zinc is expected
to bring a significant number of jobs to an economically distressed area of
northern New York State and jumpstart Star Mountain’s growth into an
outstanding new mining company. The team we’ve assembled has world class
financial and mining experience that we believe will enable the company to grow
into a successful global base metals mining group. I am pleased to welcome
Hudbay onto the share register of Star Mountain.”
The transactions are subject to various customary closing
conditions and are expected to close by October 31, 2015.
For more information, visit www.starmountainresources.com
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