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PERTH (miningweekly.com) – Iron-ore junior Northern Iron on Monday announced that its Norwegian subsidiary Sydvaranger Gruve AS (SVG) has instigated a number of initiatives to improve the company’s financial position and to ensure the continuation of the group’s operations.
SVG earlier this year admitted to its economic struggles owing to the continued low market price environment for iron-ore, with the company saying that its working capital position has been negatively impacted.
Northern Iron reported on Monday that its subsidiary had accepted offers from its financiers for continued support between July and October this year, including extension of waivers on servicing debt facility obligations, and associated covenants.
SVG also accepted an offer from the Tschudi Group for a deferral of payment obligations associated with its port lease, office rental and land lease for a six-month period, between July and December this year.
The cost deferred during this period would only become payable after two years.
Furthermore, SVG also reached an agreement with its main offtake customer for a contract amendment covering the July to October period, after which the parties have agreed to terminate the existing long-term contract without further obligations, and to consider a new arrangement in future, in good faith.
Northern Iron said that the opportunity to optimise offtake arrangements for the SVG product provided a significant advantage in ongoing efforts to pursue options to restructure SVG’s debt and also consider new sources of capital with the objective of servicing debt obligations, and ultimately establishing a profitable business.
The arrangements with both the financiers and offtake partner were expected to sustain SVG’s financial position at a level sufficient to maintain normal operations, Northern Star said, and the activities of the business as a going concern for the immediate future, as well as improving the outlook for enabling a longer-term solution to be implemented.