Insolvent St. Lawrence mine has a buyer, but formal agreement still weeks away
Deal to sell mine to unknown bidder could be formalized at Sept. 27 court hearing, with a restart to follow
A prospective new owner has been selected for the troubled fluorspar mine in St. Lawrence, but key details remain locked behind a non-disclosure agreement as negotiations on a formal deal continue.
But it was made clear following a court appearance in St. John's on Tuesday morning that the unknown buyer has big plans for the idled mine on Newfoundland's Burin Peninsula, which is good news for the 250 people who worked at the site, and the entire region.
"My understanding is the intent of the successful bidder is to reopen the mine," said Phil Clarke of Grant Thornton, who is acting as monitor for the sales process, which is being carried out under the Companies' Creditors Arrangement Act.
Clarke said there were multiple bidders from around world for the mine, which closed in February after the owner, Canada Fluorspar, ran out of cash.
He said the successful bidder was selected on Aug. 18.
"It's never an easy choice. These are complicated scenarios. But we had multiple bidders and the monitor stepped back and holistically looked at the offers and made a recommendation to the secured creditors," Clarke said.
But it's not a done deal.
Creditor protection was set to end Friday, but Grant Thornton went to court on Tuesday to ask for an extension to allow more time to finalize the sale.
With no opposition to the request, Justice Alexander (Sandy) MacDonald agreed to extend creditor protection until Oct. 17.
The matter is expected back before MacDonald on Sept. 27, when Grant Thornton expects to seek his approval for a formal sales agreement.
Clarke said the area's deep connection to the mining industry, and a trained workforce, were key factors in attracting so much attention from prospective buyers.
But the hot market for acid-grade fluorspar — an ore used in the manufacture of, among other things, aluminum and glass — and the fact the site is fully permitted and ready to operate, were also enticing.
"There was lots of interest from parties around the globe, so we're confident we had a good sales process," he said.
Industry Minister Andrew Parsons called Tuesday's developments positive.
"I believe we are getting toward hopefully a finalization of of this very long process, and I do believe it will be positive for the entire area of St. Lawrence and all those people that have been involved with this mine," he said.
But some big questions remain: who is the successful bidder and what are the terms of the deal? When will the mine reopen, and what will be the size of the workforce?
There's also a long list of creditors — both secured and unsecured — hoping to get paid for their investments and services rendered.
According to documents filed with the court by Grant Thornton, Canada Fluorspar owes roughly $95 million to three secured creditors, nearly $23 million to unsecured creditors, and just under $10 million for capital leases of equipment and machinery.
The largest secured creditor is Bridging Finance Inc., which is owed $53 million, the bank HSBC is owed $18 million, and the provincial government provided a $17-million loan.
Bridging and the provincial government have also cost-shared a $6.5-million injection of cash to keep the mine in care and maintenance mode and to fund the sales process.
Clarke said the creditor claims process will be addressed after the sale agreement has been finalized.
Parsons on Tuesday refused to say whether the provincial government agreed to forfeit its $17-million loan to CFI in order to make the operation more attractive to potential buyers.
He said the province will be fully transparent when the time is right, perhaps in October.
"What I would say is that a step like this gives me a lot more hope than the alternative, which has been factored, or considered, at various points during this," Parsons said, referring to the option of bankruptcy and the auctioning-off of company assets. Under that scenario, he said, there would be little hope of the mine ever reopening.