TORONTO (miningweekly.com) – Iron-ore producer Northland Resources on Friday announced its Swedish subsidiary had filed for court protection against creditors as it was finalising negotiations for a long-term financial solution.
The company said the decision was based on a shortage of liquidity and deemed to be a necessary step to give the company the time needed to decide on what to do.
Northland on Wednesday withdrew an equity issue and bond issue in favour of deeper discussions with a number of potential investors to develop a solution for the company’s long-term funding, which resulted in its share price plunging by 26%.
The financing would be used for investment and operational costs for the Kaunisvaara project, the logistics chain associated with it, as well as ongoing business operations, which included the Hannukainen project.
The company said it had invested about $900-million in developing the Kaunisvaara project by the end of December, and was now seeking cash to secure the continued operations and the shipping of iron-ore concentrate through Narvik during the reconstruction period.
During the court-protection period, no payments could be made to suppliers for services or goods rendered in the period before the date of filing for reconstruction. Suppliers would be paid for services and goods provided during the reconstruction period.
Northland’s Toronto-listed stock had declined by 34% in value this week to close at 11.5 Canadian cents a share on Friday.