Northland Resources has invested in top modern new equipment for its mining project in Pajala, but lacks funding for continuation of the operation. Photo: Northland Resources
Pajala iron ore miner Northland Resources has filed for reconstruction with Luleå District Court due to shortage of liquidity. The move comes a day before the company starts loading its first shipment from Narvik.
“Work continues towards securing long-term financing,” writes Northland’s Swedish subsidiary in a press-release issued Friday morning. The company is operating the newly established mine near Pajala in the Swedish, Finnish borderland and was until two weeks ago believed to be one of the most promising signs of the mining boom in the Barents Region.
The project employs more than 800 people.
At the end of December 2012, Northland had invested more than USD 900 million in the Kaunisvaara project (including prospecting, geological and financial studies and the project build-up).
“To ensure that the value of these investments is preserved, the Company is holding constructive discussions with the bondholders in the outstanding bonds to reach a solution that will secure the continued operations in Kaunisvaara and the shipping of iron ore concentrate via Narvik during the reconstruction period,” the press-release reads.
Northland has in consultation with its main creditors decided to seek reconstruction of its Swedish subsidiary. The aim is to get support from both bondholders and stakeholders for about $12 million (€8,94 million) to ensure continued operations in Kaunisvaara and the shipping of the first iron ore concentrate via the port of Narvik in Northern Norway during the reconstruction period.
The first shipment from Narvik is fixed for loading of 40,000 tonnes of high grade iron ore concentrate for a customer in Europe. Loading is expected to commence on the February 9, the company reports.
Northland says in the press-release that it aims to have agreed a solution for its long term funding by March 4.