Northcliff Resources short on money to build Sisson mine
Mining company hasn't lined up funding to build the project, it's seeking debt financing and new partner
Northcliff Resources does not have any of the $579-million required to build the Sisson mine and it is also missing the additional funding necessary to proceed with the project, according to the company's president.
The lack of funding has created a sense of uncertainty about the future of the open-pit tungsten and molybdenum mine, which would be located north of Fredericton.
"If we don't get the funding, it will be very difficult to build the project," Zahovskis told CBC News.
In addition to the cost of building the mine, the company needs capital for financing and interest charges for the project, which would also include a processing plant and tailings pond, Zahovskis said.
Debt financing and funding from existing or potential new partners is required to build the mine, according to the company's "management, discussion and analysis" document, filed with a financial regulator earlier this month.
- Chris Zahovskis , president and CEO of Northcliff Resources
The Vancouver-based mineral development company said it's talking with Canadian and international banks about debt financing and the outlook is positive.
"There is good appetite for debt," Zahovskis said.
But Roger Haineault, who owns a tax and accounting firm in Saint John, said the mining company's financial situation raises questions about the viability of the project.
"I think it's somewhat surprising that at this stage in the game they are unsure of where their financing is coming from," Haineault said.
Northcliff Resources told CBC News it's looking for another joint venture partner and is in talks with Canadian and foreign companies.
"Indications that we have right now lead us to believe that [funding] would not be a problem," Zahovskis said.
Northcliff Resources already has one partner to build the Sisson mine.
Todd Minerals, a company from New Zealand, joined the Sisson partnership in October 2013.
Northcliff Resources also filed documents with securities regulators in September 2013, suggesting the company didn't have the money to go forward with the project.
'Ready to begin with everything but their wallet'
The high cost of building a mine and fluctuating mineral prices have caused serious financial dilemmas for other mining companies with operations in Atlantic Canada.
Shortly after building an antimony mine in Newfoundland and Labrador, Moncton-based Roycefield Resources shut down operations in 1998 as the price of antimony decreased. The company went into receivership in 2001.
The price of tungsten, which the Sisson mine would produce, has also dropped.
It has fallen well below the average price estimated in Northcliff Resources's feasibility study for the Sisson project.
"We won't be producing any tungsten for at least let's say two, two-and-a-half or maybe three years. So the long-term outlook, the long-term fundamentals for tungsten, are still very strong," Zahovskis said.
Earlier this month, the New Brunswick government accepted Northcliff Resources' environmental impact assessment report for the Sisson project.
Public consultation will be announced within the next month, according to the provincial government.
"It would look like they're having a hard time getting their project lined up as these approvals are coming along," Haineault said.
"It could come to a point where they're ready to begin with everything but their wallet," Haineault added.
“The process of securing the funds needed in project financing occurs in parallel with permitting, engineering and negotiations for the sale of tungsten and molybdenum products from the Sisson Project and we continue with these activities and remain on track," he said.
Sisson would create local jobs
The majority of the 500 jobs during construction of the mine and 300 jobs during its operation would be local, according to Zahovskis.
The mine would sustain employment for a minimum of 27 years and construction would take approximately two years, according to Zahovskis.
The company's president also said the company would be willing to contribute to road and bridge development off existing highways to make the mine more accessible to local workers.
"To the extent that we need to update the odd bridge here and there, we would definitely undertake that work with the provincial government," said Zahovskis.