Firesteel Resources Inc: Precious metal mined responsibly

Firesteel Resources Inc: Precious metal mined responsibly

In the world of mining, all too often we’re accustomed to seeing European and American management teams taking on assets in African or Latin American countries. It’s refreshing then to see this model turned on its head, with two African mining experts acquiring and operating European and American mines, bringing them to their potential.


That is the story of Firesteel Resources, a junior mining company focused on the acquisition and development of mining properties with near term production potential. Firesteel Resources was established by two natives of Zimbabwe, who combined several years of mining development experience and are using it to their advantage in developed markets.


One of these, Michael Hepworth, spoke to the Sustainable Business Review recently about the firm and its recent acquisition of a mine in Finland. Mr. Hepworth has been working in this line of business for over 12 years and as we discovered, has a keen eye for seeing the potential in a mine and generating value for shareholders and other stakeholders.


Introducing the Laiva Property

With an unemployment rate of around 14%, the area around the Laiva mine in the Ostrobothnia district of Finland, has a rate which is about twice as high as the Finnish national average. Despite having a relatively large city in Oulu – with some 250,000 people – foreign investment isn’t always easy to attract, as investors tend instead to look at Helsinki.


The Laiva Property, located near the city of Raahe in the Ostrobothnia district, was an obvious place to begin to attract the foreign investment needed to create the employment that the area so needs. With its previous owner sinking some $300 million into the mine, when Firesteel Resources came to look at it, Mr. Hepworth says that the asset was “remarkable.”


The statistics confirm this. For CAD$20 million, Firesteel Resources is acquiring a near ready mine, with an indicated 600,000 ounces .). “The leach tanks need some work,” Hepworth says. “Some of the conveyors need work, some of the pumps need to be replaced.” For these, the company intends to invest around $5 million to bring it to world class mining standards.


A world class asset like Laiva will signal that Raahe is “open for business”. The mine has been closed since 2014, and its reopening will be a welcome boost. As Hepworth says: “There’s a lot of people that want to see this mine back in production so we’re gaining a lot of local support. And there are a lot of Finns on board. Of the top five people at the mine, we’ve only got two Canadians with the rest being Finns. And we would hire more and more Finns as we go.”


Mr. Hepworth sees there being numerous benefits to the area: “In terms of the impact on the local economy, there are a number of areas. The first is taxes: we will generate money and pay tax on that as any good corporate citizen would. But then, each job that you create means they’re spending the money locally. And thirdly, there’s the aspect of consumables and equipment required to make this work. I see a pretty significant injection into the economy every year – probably in the region of €20 million in direct costs, including salaries. This is a pretty significant investment to the area.”


It would appear that Raahe, one of Finland’s unemployment blackspots has good times ahead. As Mr. Hepworth concludes: “We will populate the mine over the next six months with people we will draw from the local area, so I see that as being our biggest focus at the moment. There’s a very well educated, well-rounded workforce so we’re very happy that we have good access to a that resource.”


Turning distressed assets into sustainable assets

The thinking around distressed asset purchases too often focuses on the financial aspects. Many of the articles mention the fact that the seller entered bankruptcy or that the buyer is acquiring a high quality asset at a highly discounted price. While the financial element is a necessary component for any business to be sustainable, it’s just one component of a much larger picture.


The Laiva Property, acquired by Firesteel Resources, is a good example of this. When it begins operations in August 2018, it will hire hundreds of locals in an area which badly needs jobs. It will turn what was essentially a wasted asset into a valuable one and breathe life into the area surrounding it. So when mining and finance journals talk of the shareholder value being generated here, it’s well worth remembering that there’s sustainable value being created elsewhere as well.





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