Northland halts operations after creditors block bank accounts
TORONTO (miningweekly.com) – Scandinavia-focused iron-ore project developer Northland Resources on Friday stopped all its operations after its financing problems were not resolved and its creditors moved to block its bank accounts.
“As a consequence Northland lacks the liquidity to make any payments. The board of directors has therefore decided that as of today none of the companies in the group shall order or receive any goods or services,” the Luxemburg-based group said in a statement.
Northland, which has projects in Sweden and Finland, said the decision to block the bank accounts came after a meeting on Friday between the trustee, a few larger bondholders and their advisers, where they also turned down the proposed $35-million short-term bridge facility, which would have required a bondholder approval that was planned for May 30.
Northland’s financial woes began early in the year, when its Toronto-listed shares slid early, after the company cancelled its planned $250-million equity issue and $125-million bond tap, which it expected would cover rising capital and operating costs at its flagship Swedish mine, just as it started shipping first ore.
However, falling iron-ore spot prices had deterred investment in the offerings, which forced the company to seek creditor protection in February and led to its delisting from the TSX.
The company said it would use the weekend to pursue all available options to find a solution for its short- and long-term funding needs.
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