TORONTO (miningweekly.com) – Legal firm KSV Kofman has been appointed as the receiver of First Nickel after the company’s principal secured lender Resource Capital Fund demanded repayment of all of the obligations owing to it, enforcing its security under the Bankruptcy and Insolvency Act of Canada.

The Ontario Superior Court of Justice made an order appointing KSV, following extensive discussions between First Nickel and its secured lenders.

As a result of the court order, First Nickel president and CEO Thomas Boehlert and all its directors resigned on Thursday, having agreed to remain available to assist the receiver.

The company first signalled in June that the Lockerby nickel mine, in the Sudbury basin of Ontario, would be placed on care and maintenance or closed during the third quarter, after all remaining nickel ore above the 6 800-foot level had been exhausted. It had systematically been laying-off workers over the last several weeks.

Weak nickel prices had rendered the mine uneconomic and prompted it to immediately suspend a ramp development programme required to continue accessing deeper reaches of the ore deposit.

Nickel prices were trading at around five-year lows of about $4.68/lb, after a systematic price decline from highs of more than $13/lb in 2010. Weaker demand as a result of slowing growth in China and resulting high inventory levels had precipitated subdued prices worldwide.

First Nickel had acquired the Lockerby mine from Falconbridge in 2005, before idling it in 2008, when nickel prices fell from 26-year highs of about $23/lb. The operation restarted in September 2011, when the price of nickel again trended higher.

Lockerby was considered one of the highest-grade nickel operations in production in the Sudbury basin. First Nickel had an offtake agreement with Glencore Canada, that bought all the ore for processing.