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PERTH (miningweekly.com) – Despite reporting record production and sales for the year ended December, iron-ore miner Northern Iron on Tuesday warned shareholders that the company would require additional funding to continue as a going concern.
Northern Iron reported that the continued decline of the iron-ore price had negatively affected the company’s working capital position, necessitating the need to secure additional debt or equity funding to support the business for the longer term, while the company continued to implement cost-cutting initiatives across its operations.
During the quarter ended December, Northern Iron accepted offers from both its financiers for the deferral of interest payments associated with current debt facilities and lease payments on equipment finance leases, from January to March this year.
In the previous quarter, the financiers granted a deferral of principal repayments on term loans for a period of one year, and a waiver of an earnings before interest, taxes, depreciation and amortisation covenant.
In addition, Tschudi Bulk Terminals have also agreed to defer principal payments and interest costs associated with the finance lease for the concentrate storage and shiploading facilities for the period between January and March.
Northern Iron noted that one of its financiers had also extended an offer for a new working capital facility worth $10-million, of which $7-million would be reserved to cover foreign exchange hedging losses, which could be realised in the March quarter, should the weakness in the Norwegian Krone rate continue.
Meanwhile, Northern Iron on Tuesday reported record yearly concentrate production of 2.34-million tonnes, and record sales of 2.38-million tonnes for the 2014 financial year.
Production was up 18% on the previous financial year, while sales were up by 24%.
Concentrate production during the December quarter reached 563 000 t, while concentrate sales were 552 000 t.
During the quarter, the Sydvaranger mine, in Norway, produced about 3.03-million tonnes of ore, a 31% decrease over the previous quarter. Mining activities were currently focused on supplying ore from both the northern and southern pit of Bjørnevatn, and three satellite pits, which is then blended to secure sustainable quality of ore feed to the primary mill.