Mineral Park Mine facing challenges

KINGMAN - In September, Mineral Park Mine laid off 40 workers as a way to cut costs. The parent company of the mine north of Kingman, Mercator Minerals Ltd., is now entertaining several "strategic alternatives" that may or may not affect Mineral Park.

An inquiry to Mercator's president and CEO, D. Bruce Mcleod, was met with a simple response to refer to the company's Sept. 30 news release, and a short statement as to the status of Mineral Park.

"There has been no decision to close Mineral Park," Mcleod said in an email Friday.

According to the news release, Mercator is considering "a sale of the Company, a business combination with another entity, a sale of all or a portion of the assets of the Company, a strategic investment in the Company or any combination thereof."

Mineral Park primarily mines copper and molybdenum, which is used for construction grade steel, stainless steel and in lubricants among other uses. The prices for those minerals have decreased drastically. Copper has dropped 11 percent during the past year, and molybdenum has dropped from $16.50 per pound in June 2011, to $11.17 in December 2012, to just $9.75 currently.

These drops in commodity prices have led to Mercator having issues with its creditors. As of Sept. 30, Mercator held an outstanding balance of $86.8 million and has had to renegotiate what it calls the Mineral Park Credit Facility twice. During the first negotiation, Mercator missed a $4.8 million principal payment on Sept. 30 and its lenders agreed to forbear the remedies available to them until Oct. 31.

The company again missed the deadline, but got its lenders to agree to an extension until Nov. 15. In the meantime, Mercator has drawn a total of $8 million from a "debt service reserve account" that the company said would be used "to fund ongoing operating activities at MPI (Mineral Park)."

Mercator is a publicly traded company on the Toronto Stock Exchange, and its value has plummeted over the past year. Mercator stock was traded at a 52-week high of 64 cents and is now at six cents, according to Reuters. Canadian Imperial Bank of Commerce World Markets, an investment firm, has stated its analysis of Mercator shows that the stock price will drop to three cents.

The company has announced it will release its third quarter 2013 financial and production reports Thursday.

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