Offer on the Table for Worthington Mackenzie Mill
By 250 News
Tuesday, May 05, 2009 04:00 AM
Prince George, B.C.- There is some more encouraging news for the community of Mackenzie. Mackenzie Timber Group, a wholly owned subsidiary of Range Gold Corp, has entered into an option to purchase the Worthington Mackenzie pulp mill.The offer on the table suggests a cash payment of $12 million, and as much as $33 million in shares of Range Gold. The option is good until May 1 of next year.
Mackenzie Timber’s Chief Financial Officer, Garth Edgar says the recent announcement by Canfor to restart it’s sawmill in Mackenzie was very encouraging “We’re hoping to follow their lead” says Edgar, “We are looking to enter talks with everyone involved to see if an acceptable agreement can be reached, We’re very, very interested in it(the pulp mill)”
Canfor announced on Friday that it would fire up it’s sawmill in Mackenzie in July. That came about following discussions with the government about stumpage, the unions about concessions and the District of Mackenzie about tax breaks. Edgar says Mackenzie Timber will be looking to achieve the same kind of package. “We think we can turn this into a win win for everyone.” His company has already held preliminary talks with various levels of government.
According to Edgar, the preliminary proposal would see the Mackenzie mill brought back on stream to produce pulp, but there are other aspects that have been under discussion as possibilities, such as bio energy and the possibility of selling any surplus power ( if there is any) to B.C. Hydro.
Edgar says Mackenzie Timber Group was encouraged to hear Canfor was open to looking at possibly supplying chips to the pulp mill. In it’s announcement Friday, Canfor President Jim Shepard said the chips will be trucked to Prince George, but that Canfor would be willing to discuss that matter with Mackenzie operations.
Right now, the proposal is under review by John Duncanson of Duncanson Investment Research.
In a release, Mackenzie Timber says it is “dedicated to acquisition and redevelopment of strategic undervalued forestry assets and responding to opportunities that are being presented in the forestry industry due to the current global economic downturn.” CFO Garth Edgar says Mackenzie Timber is also taking a look at the shuttered AbitibiBowater plant in Mackenzie “The brain trust here doesn’t just see a pulp mill.”
If the deal is approved with all parties agreeing to meet the conditions (including tax breaks, union concessions etc) Edgar says it is still too difficult to pin down a date when the mill could be up and running “Someone said September may be a reasonable deadline” says Edgar “But there is still a lot more work to do.”
Still, Edgar is optimistic, “We think that if we can bring all the parties together, we can bring on line an efficient good mill that will produce a higher grade of pulp at a time when pulp mills will be facing a brighter future.”
Worthington Properties of Edmonton bought the Mackenzie Mill (formerly owned by Pope and Talbot) in September of last year for a fraction of what is being offered in this proposal but CFO Garth Edgar isn’t dwelling on that “ Even at $45 million, that is still well below the replacement value of that mill.”
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Posted by: gamblor on May 5 2009 6:55 AM
IMO the government should do its due diligence this time though to ensure they have the funds to make it a viable enterprise and not another fiasco like the Worthington deal.
Pat Bell you would be well advised to take a lead role in the responsibility of due diligence this time around, as your fiduciary duty to your constituents... and don't rush any deal to influence the election.