Bad News for Flin Flon: Anglo to Sell Hudson Bay Mining and Smelting to OntZinc.

A company founded by Clifford Frame has gained control of the Flin Flon copper-zinc mine and smelting complex. Anglo American Plc, the world's No. 2 mining company, agreed today to sell its Hudson Bay Mining and Smelting unit in Flin Flon, Manitoba, to OntZinc Corp. for $325 million Canadian ($259 million US) in cash.

This sale does not bode well for the community of Flin Flon. The community is completely dependent on the mine and smelter to survive, and the ore bodies are running out. The Flin Flon mine and smelter complex has over 70 million tonnes of tailings in its waste management facilities, all acid generating. Over 4 tonnes of toxic heavy metals are released annually into the environment from the complex. The prospects are now dim for this operation to be responsibly closed and cleaned up.

Many workers have sacrificed their lives for the company. Since 1929, 126 workers have died in the mining operations, 11 in the last decade. Much of the land surrounding the complex is contaminated with lead, cadmium, zinc, copper, arsenic and mercury.

Anglo, based in London, has been selling and closing base metal mines for the last several years to boost profits after zinc and copper prices plunged.

OntZinc, the company buying the property was, until June 21 of this year, headed up by Clifford Frame. In June, Frame retired and his shares were bought by business partner Gregory Peebles of Toronto. Peebles has been a member of the Board of OntZinc since it was founded.

OntZinc is a penny-stock company that trades on the TSX Venture Exchange (OTZ-CDNX). It shares are currently trading at 6 cents. The company has never operated a mine.

Shameful History

In the mid-70s, Frame headed up a major expansion at the Denison mine in Elliott Lake, Ont., then the world's largest uranium producer, where the company was accused of many questionable safety and environmental practices.

He was also in charge of the Quintette project in British Columbia, which included a $1.5-billion public investment in roads and other infrastructure, plus $700 million in bank loans, but he was fired in 1985 when it went bust and left the banks with hundreds of millions of dollars in losses.

Through his company, Curragh Resources, he then lined up millions of dollars in government support to re-open the Faro Mine in the Yukon, which went bankrupt in 1993, leaving behind the company's debts — as well as over $250 million in clean-up costs.

Frame also secured $100 million in federal and provincial subsidies to build the Westray coal mine in Nova Scotia. On May 9, 1992, just nine months after it opened, an explosion in the Westray mine left 26 workers dead. Frame fought a successful legal battle to avoid testifying at a subsequent public inquiry into the Westray disaster.

When the final report on Westray was released, Justice Peter Richard described Frame as an "uncompromising and abusive" owner and concluded that Westray management, from Frame on down, failed miserably in its duty to ensure the mine operated safely. Curragh Resources went bankrupt in the wake of the Westray explosion and falling zinc prices for its Yukon mine.

Frame then acquired a closed asbestos mine in a remote area of British Columbia and announced plans for a multi-million dollar project to mine magnesium on the property. Instead it mined asbestos. One year later, after a fire in late 2000, the operation was shut down. He was sacked as chairman in 2001.

Most recently, Frame formed OntZinc by merging a private firm with the publicly-traded Pan American Resources in 2002. OntZinc is exploring for zinc in the Kitchener-Waterloo area of Ontario and owns closed zinc mines in Nova Scotia and northern New York State, which it hopes to put back into production.

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For more information: Joan Kuyek, MiningWatch Canada (613) 569-3439