Work halted on Upper Peninsula gold, zinc mine
Wednesday, July 4, 2012
TRAVERSE CITY, Mich. (AP) — The leading partner in a planned zinc and gold mine in Michigan's Upper Peninsula said Tuesday it's putting the project on hold and has no plans to continue investing toward its development.
Toronto-based Hudbay Minerals Inc. said it is suspending work on the Back Forty Project, a venture targeting a sulfide ore deposit near the Menominee River. Hudbay owns 51 percent of the venture, while Aquila Resources Inc. has a 49 percent stake.
The company's decision was based on capital commitments at three other projects — two in Canada, one in Peru — with the potential to produce stronger returns, said John Vincic, vice president for investor relations and corporate communications.
"Our focus now will be working with Aquila Resources to consider strategic alternatives that are in the best interests of our shareholders, other stakeholders, and the Back Forty Project," Vincic told The Associated Press in an email.
The EagleHerald of Menominee and Marinette, Wis., first reported Hudbay's decision.
Aquila President Tom Quigley said he still expects the Back Forty mine to be built at some point. Planners say the open-pit operation would yield gold, zinc, silver and copper.
Aquila has spent about $30 million on the project, but Hudbay was paying development costs and had been expected to do so at least until permits were obtained from the Michigan Department of Environmental Quality, he said.
"It's in our best interests to move forward," Quigley said. "It's ready to go and the economics look pretty good, and we just have to figure out how to restructure it so it happens."
He said his company is calculating the costs of finishing work on permit applications, which are mostly complete, and would need more money to advance beyond that stage.
Environmental activists and some property owners in the Menominee area are fighting the Back Forty project, contending it would pollute nearby waters. Company officials say they have conducted tests and studies to meet state standards.
Hudbay also said it was ending an exploration partnership with Aquila.
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