Cantung owner owes $75M
North American Tungsten seeks creditor protection shortly after announcing 80 layoffs
Karen K. Ho
Northern News Services
Saturday, June 13, 2015
DEH CHO
Junior resource company North American Tungsten Corporation (TSX-V:NTC) has obtained creditor's protection.
North American Tungsten's remote Cantung Mine site located just inside the NWT border, 4.5 hours north of Watson Lake, suffered production interruptions and had to temporarily lay off 60 employees. The company recently announced restructuring proceedings. - photo courtesy of North American Tungsten
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The Vancouver-based parent of the Cantung mine announced the move on June 9, citing the low prevailing market prices for intermediate tungsten product APT, high debt service payments, insufficient capitalization, and recent operational issues as reasons.
"Although the corporation is currently unable to meet all of its past obligations and ongoing financing costs, (the company) expects that a financial restructuring will enable it to continue to operate as a going concern and preserve value for stakeholders," the statement said.
Documents show the company owes $79.5 million to more than 200 creditors, including more than $34,000 with KBL Environmental Ltd, and $5.5 million with the GNWT.
The announcement quickly followed the recent series of approximately 80 "temporary layoffs" - primarily in mining activities - at the Cantung mine over a six-week period. Each employee was scheduled to miss a three-week rotation at the facility in the territory's Deh Cho region, located north of Watson Lake on the border separating the NWT and the Yukon.
North American Tungsten stated that it intends for operations to continue uninterrupted, and to meet all of its obligations to employees and suppliers of goods and services provided after the filing date of June 8. The company's period of creditor protection is 30 days, set to expire on July 9. The Supreme Court of British Columbia has set a further hearing date of July 8 and the company has stated it will seek an extension of its creditor protection.
Multiple requests to speak with company chairman and chief executive officer Kurt Heikkila were declined.
In a previous news release, the company cited the "significant negative impact" of depressed tungsten prices on its 2015 operating results, as well as operational challenges over a 30-day period this May, including a power supply issue that stopped production for five days.
Recently, Robert C. McLeod, Minister of the Department of Lands, was asked about the viability of Cantung mine in the legislative assembly by Minister Bob Bromley on June 4. McLeod indicated that the Mackenzie Valley Land and Water Board had set Northern American Tungsten's security at $30 million that was to be paid 90 days after the granting of a new water licence. Originally, the security, which would be posted to the GNWT to cover the estimated cost of cleaning up the site if the company would later prove unable to do so, was $11.7 million. The company was granted a Type A water license on April 1 last year.
The day the restructuring was announced, shares were temporarily halted on the Toronto Stock Exchange. When trading resumed on June 10, the volume spiked to 168,000, and shares of the company fell from 3.5 cents per share, to 1.5 cents. On June 12, 2014, the price was 9 cents.
