Northland discusses Kaunisvaara future with 5 parties

Swedish iron ore producer Northland Resources is looking at all options for its financially troubled Kaunisvaara mine, as the market waits to hear of a long-term solution this week.

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A spokesman for Northland did not comment on whether the sale of the Kaunisvaara mine is an option, but told Steel First on Monday April 22 that “everything is being discussed”.

The company has been in discussions with at least five parties regarding a long-term solution, the spokesman said.

Northland’s three Swedish subsidiaries filed for reconstruction – a form of insolvency – in early February following a failed $375 million equity and bond issue after the miner posted over $400 million in capital and operating cost overruns in January.

Its ceo Karl-Axel Waplan and administrator Lars Söderqvist came to London to discuss the miner’s long-term options, Swedish and Norwegian media reports said last week.

“The process regarding the long-term financing is going according to plan, and the company will inform the market as soon as more information is available,” the iron ore producer had said in a response to the media speculation on April 18.

Northland secured $26 million in short-term funding from its bondholders and major suppliers to sustain operations in April, and has anticipated resolving its long-term funding situation during this month.

The Oslo-listed company paid $23.6 million in interest to its bondholders, in agreement with the administrator and without affecting the short-term funding already received, Northland said on April 15.

The reconstruction period for Northland Resources AB, the first of Northland’s Swedish subsidiaries to file for the process, ends by May 8. Under Swedish law, a company can lengthen its reconstruction period for three months at a time, for a maximum period of a year.

Northland started production at its Kaunisvaara mine at the end of last year, and has made two shipments of iron ore concentrate this year.

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