Silvermet Inc.
TSX VENTURE : SYI

Silvermet Inc.

February 19, 2009 17:53 ET

Silvermet Inc. Announces Completion of Waelz Kiln Acquisition

TORONTO, ONTARIO--(Marketwire - Feb. 19, 2009) -

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Silvermet Inc. ("Silvermet" or the "Company") (TSX VENTURE:SYI) announced today that it has acquired, subject to certain closing conditions, the Waelz kiln operations located in Iskenderun, Turkey that were previously operated by Metoks Madencilik Metalurji Tasimacilik San. ve Tic. A.S. ("Metoks"), as previously described in its press release of November 4, 2008. The acquired operations have been closed since September 10, 2008 as a result of Metoks' lack of working capital and high leverage. Silvermet intends to immediately begin maintenance and minor capital expenditures required to re-start operations, which is targeted to occur during April.

The purchase price is approximately US $5,356,716, of which US $960,000 is payable in cash over two years. The balance is comprised of Silvermet's assumption of liabilities and bank debts of the former operations, as well as cash payments. The purchase price includes a price adjustment mechanism, whereby the vendor may be entitled to additional payments of up to US $2,348,372 over the next 5 years, dependent on the performance of the operations.

Silvermet intends to completely change the raw materials handling and feeding systems and to install process controls to better manage the operations. Significant process improvements are expected to occur as a result of this capital expenditure program, including cost reductions and capacity increases. Detailed evaluation of alternatives and engineering will take place immediately and implementation of the capital expenditure program is planned to take place over the balance of the current year.

Initially, Silvermet is targeting the processing of 60,000 tonnes of Electric Arc Furnace Dust ("EAFD") per annum to produce approximately 12,000 tonnes of zinc contained in clinker, plus lead and silver by-products. The Turkish electric arc steel manufacturers produce about 400,000 tonnes EAFD per annum as waste by-products. New steel plants and capacity expansions presently under construction will increase this to 600,000 tonnes EAFD over the next two years, assuming full capacity utilization. Other existing kiln operations in Turkey process between 50,000 and 75,000 tonnes per annum of EAFD. Silvermet believes there remains a significant opportunity to build capacity to service this market, which Silvermet expects to vigorously pursue.

Silvermet has spent considerable time and effort in recent years evaluating the business potential of establishing a Waelz kiln operation in Turkey to recover the zinc content from the EAFD that is produced by Turkey's electric arc steel makers. Turkey ranks as the 11th largest steel producing country in the world and approximately 75% of its steel production comes from electric arc furnaces. The share of steel production using electric arc furnaces in Turkey is one of the highest in the world and Turkey ranks 7th globally in terms of steel production volumes using the electric arc furnace process.

The acquisition of an existing Waelz kiln operation in Iskenderun immediately puts Silvermet into the business of recovering zinc from EAFD. At current zinc prices, management estimates that the business can be operated at a profit. Silvermet's management is enthusiastic about the prospects of growth and process improvements for the Iskenderun operations and the potential growth opportunities in the overall Turkish market.

Caution concerning forward-looking statements: The information in this release may contain forward-looking information under applicable securities laws. This forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those implied by the forward-looking information. Factors that may cause actual results to vary include, but are not limited to, inaccurate assumptions concerning the exploration for and development of mineral deposits, political instability, currency fluctuations, unanticipated operational or technical difficulties, changes in laws or regulations, the risks of obtaining necessary licenses and permits, changes in general economic conditions or conditions in the financial markets and the inability to raised additional financing. Readers are cautioned not to place undue reliance on this forward-looking information. The Company does not assume the obligation to revise or update this forward-looking information after the date of this release or to revise such information to reflect the occurrence of future unanticipated events except as may be required under applicable securities laws.

The TSX Venture Exchange has in no way passed upon the merits of the transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Silvermet Inc.
    Stephen G. Roman
    President and CEO
    (416) 203-8336
    (416) 368-5146 (FAX)
    or
    Silvermet Inc.
    Rein A. Lehari
    CFO
    (416) 203-8336
    Website: www.silvermet.ca