Breakwater gets break from bankers

The struggling Toronto firm that owns the Nanisivik zinc mine got a break from its bankers last month.

Breakwater Resources Ltd. announced on Nov. 15 that it has worked out a deal with its bankers intended to give the company enough cash to operate until December 2002.

Under the agreement, Breakwater’s bankers will loan the company another US $6.5 million, under a guarantee provided by the company’s largest shareholder, Dundee Bancorp Inc.

As of Oct. 31, Breakwater owed its bankers US $22.6 million under a term loan, and another US $16.3 million through a revolving fund used to finance operations at Nanisivik by pledging ore shipments against a line of credit.

At the same time, Breakwater won’t have to make any payments on the principal of its loans until December 2002, but must pay interest on them.

Breakwater will also raise $15 million in a share offering.

Starting next year, Breakwater will be expected to begin paying for a clean-up of the Nanisivik mine site in compliance with a closure plan that’s a condition of its water licence.

It also has to honour a commitment to pay severance to the workers who will lose their jobs next year.

Meanwhile, the company has begun a cost-cutting plan that’s designed to maximize cash flow from the operation.

“All of the operations are under continual review to minimize cash requirements. Revisions to previously approved mining plans are under way and the temporary suspension of operations at one or more of the other mines is under constant review,” a company press release said.