{"id":35500,"date":"2018-09-16T06:00:00","date_gmt":"2018-09-16T14:00:00","guid":{"rendered":"https:\/\/www.juneauempire.com\/?p=35500"},"modified":"2018-09-17T16:40:38","modified_gmt":"2018-09-18T00:40:38","slug":"transboundary-mine-faces-200-million-cash-crunch","status":"publish","type":"post","link":"https:\/\/www.juneauempire.com\/home2\/transboundary-mine-faces-200-million-cash-crunch\/","title":{"rendered":"Transboundary mine faces $200-million cash crunch"},"content":{"rendered":"

With a strike, falling copper prices and more than $554-million<\/a> ($723 million Canadian) soon due to lenders, Canadian mine owner Imperial Metals, which operates the Red Chris Mine in the transboundary Stikine River watershed, is in dire financial straits.<\/p>\n

The mine’s financial situation — and its lack of bond money for environmental reclamation at the site — has unearthed questions about what will be done to keep its tailings pit from leading pollution into the Stikine River, which supports an average annual run of about 40,000 adult Chinook salmon.<\/p>\n

Cash crunch<\/p>\n

Imperial’s woes have been widely reported, but Canadian magazine The Narwhal dove deep into the particulars in an August article<\/a>.<\/p>\n

Thomas Schneider is an expert in financial reporting of environmental liabilities and a professor at Ryerson University in Toronto. Schneider was a source in the Narwhal article and spoke to the Empire recently describing the situation.<\/p>\n

On Oct. 1, Imperial Metals will have to renegotiate or pay a $153 million ($200 Canadian) credit facility — basically a loan from investors, Schneider said. That’s just the first of a series of credit facilities that mature between now and March, totaling $554 million.<\/p>\n

“They have a big, big cash crunch ahead of them,” Schneider said.<\/p>\n

Imperial Metals didn’t return requests for comment for this story. In their most recent quarterly report, they didn’t make any assurances that they’d be able to meet their debt obligations.<\/p>\n

“There can be no assurance that the Company will be able to successfully extend or renegotiate this debt, and that adequate additional financing will be available on terms acceptable to the Company or at all, which creates a material uncertainty that could have an adverse impact on the Company’s financial condition and results of operations and may cast significant doubt on the Company’s ability to continue as a going concern,” the company wrote.<\/p>\n

Translation: the debt threatens the Imperial Metals’ ability to function in its current state.<\/p>\n

Schneider said he wouldn’t want to speculate whether the mine will go bankrupt, but financial indicators show that it faces an uphill battle to stay in operation.<\/p>\n

A two-month strike this summer from a steelworkers union at Mount Polley Mine, which Imperial Metals also owns, cost the company about $28 million, according to media reports.<\/p>\n

Imperial owes about $57 million a year ($75 million Canadian) in interest payments, Schneider said. Imperial doesn’t have the cash flow right now to pay that interest, and it’s been paying some of that interest in company shares, diluting its stock prices. It’s stock price has fallen<\/a> from a high of $18.34 in 2014 to $1.14 at press time.<\/p>\n

IMperial Mines 2018.Q2 FS<\/a> by Kevin Gullufsen<\/a> on Scribd<\/p>\n