01/04/2009 - 22:00

Griffin Mining play may pay for Magellan

01/04/2009 - 22:00

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THE saga surrounding lead miner Magellan Metals has taken a new twist, with Perth mining entrepreneur Mladen Ninkov seeking to win control of the embattled Canadian company that owns Magellan.

Griffin Mining play may pay for Magellan

THE saga surrounding lead miner Magellan Metals has taken a new twist, with Perth mining entrepreneur Mladen Ninkov seeking to win control of the embattled Canadian company that owns Magellan.

Mr Ninkov is chairman of China-focused Griffin Mining Ltd, which has launched a $C27 million ($31.4 million) cash offer for Toronto Stock Exchange-listed base metals firm Ivernia Inc.

If the hostile takeover is successful, Griffin Mining plans to build a smelter that would convert the lead concentrate into lead bullion, a process said to make the transport of the lead safer and more secure.

City of Fremantle Mayor Peter Tagliaferri welcomed the takeover bid after reading comments by Griffin finance director Roger Goodwin in Canadian newspaper the Financial Post.

The article quotes Mr Goodwin saying that the company was prepared to make an investment to deal with the environmental concerns over the Magellan Lead Carbonate Project, located 30 kilometres west of Wiluna.

"We are familiar with the issues, we are familiar with how their [Iverina's] project was originally planned, and so we are prepared to take this on," Mr Goodwin told the newspaper.

Mr Tagliaferri said Griffin's willingness to ship ingots, not carbonate, made a mockery of the state government's current approval of lead exports through Fremantle.

"I support the takeover bid wholeheartedly," he said.

However, Magellan Metals general manager of corporate and social responsibility, John Yates, said the company had already invested $3 million in recent years researching the feasibility of building a smelter to convert the lead concentrate into lead bullion.

"It just isn't a viable option for us," Mr Yates told WA Business News.

Mr Yates said the Wiluna mine site's remote location, coupled with the expected mine life of about seven years, and the high capital costs in operating the mine, were mitigating factors.

He said while most smelters bought feeds from other locations, the Wiluna site - situated about 750km northeast of Perth - was a significant logistical challenge.

Mr Ninkov could not be reached for comment to confirm the plan to build the smelter.

With substantial cash balances and no debt, Griffin Mining said it had the funds to bring Ivernia's Magellan lead mine back into full production.

The mine was shut in April 2007 when it was forced to stop shipping from the Port of Esperance following the lead contamination debacle where thousands of birds in the area were found dead from lead poisoning.

The mine was once touted to become one of the top five lead-producing mines in the world, accounting for about 2 per cent of global lead supply.

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