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Northland will complete deliveries of iron ore concentrate that has already been produced, it said on Tuesday October 7.
Last week, the miner did not receive enough support from its super senior bridge bondholders to access requested funds in an escrow account to improve its liquidity.
As a result, the board decided to halt operations and continue discussions with financial and industrial investors to find a long-term financing solution that will enable Northland to restart production.
Northland’s share price has tumbled following the news and traded as low as NKr0.42 ($0.06) per share in early morning trading on the Oslo Bourse on Tuesday – a fall of 48.45% day-on-day and of 89.73% since the start of the year.
“Given the extremely challenging market climate, the board's decision to halt operations is at this stage the only way forward to avoid bankruptcy and the resulting value destruction, even though it still means that many skilled and committed employees will have to leave,” ceo Johan Balck said.
Northland declined requests for further comment at the time of publication.
Tata Steel and ArcelorMittal accounted for all Northland's concentrate sales in the second quarter of this year. The steelmakers were not available for comment at the time of publication.
Most of the company’s 300 or so employees will receive notice of termination, and discussions with relevant labour unions have been initiated, Northland said.
It laid off 61 employees at its Swedish and Finnish subsidiaries in July after starting a formal reorganisation process.
The reorganisation followed Northland’s late-June announcement that it had halted payments to its creditors and suppliers and changed its operational strategy after it failed to secure the $200 million needed for long-term funding.
The iron ore producer has also stopped all future deliveries from suppliers given the constrained liquidity, it added on Tuesday.
Nordic civil engineering company Peab will start “a dialogue with Northland to clarify how this will affect the agreement between the parties relating to the transportation of iron ore concentrate by truck”, Peab president and ceo Jesper Göransson said on Tuesday.
Northland owes Peab SKr260 million ($36 million) following the miner’s painful, but completed, reconstruction in 2013 that was prompted by a $425 million funding shortfall.
The beleaguered Swedish miner started concentrate production at its Kaunisvaara project in northern Sweden at the end of 2012, and reached 442,000 tonnes of output in the second quarter of 2014.
Swedish iron ore miner Northland Resources has halted operations for an undefined period of time due to “extremely constrained liquidity” amid falling iron ore prices.