N.L. government to gamble up to $3M more to help save St. Lawrence fluorspar mine

The Newfoundland and Labrador government is preparing to risk more money in a bid to save the insolvent and idled fluorspar mine in St. Lawrence and the nearly 300 jobs attached to it from bankruptcy.

An applicationbefore the Newfoundland and Labrador Supreme Court on whether a sales process under the Companies' Creditors Arrangement Act can proceed is scheduled to be heard on Friday.

If approved, a court-supervised search for a new buyer or investors will begin, but theprocess is not cheap.

Two of the major creditors, Bridging Finance Inc., and the provincial government, have agreed to cost-share up to $6.5million to keep the mine in care and maintenance mode, and to hire accounting and advisory firm Grant Thornton to supervisethe sales process.

But a judge must first decide if the plan will proceed.

'There is a future here for this': industry minister

This last-ditch effort to save the mine from bankruptcy and having its assets liquidated is expected to last until July, but there's hope a new buyer will step forward and revive the operation.

• St. Lawrence, a boom-bust N.L. town, endures another hit as fluorspar mine flames out

"All of our due diligence leads us to believe this is a viable opportunity," Industry Minister Andrew Parsonstold CBC News on Wednesday.

"Everything we've seen leads us to believe that there is a future here for this."

Parsons said potential investors have shown an interest.

Bridging Finance, a privately held investment management firm, is the mine's largest debt holder. Ithas issued loans totalling $55 million to mine owner Canada Fluorspar.

In early 2017, the provincial government approved a $17-million loan.

The mine stopped production and Grant Thornton was appointed as aninterim receiver on Feb. 21, and some 230 of roughly 280 employees were laid off. Court documents blamed financial and logistical problems for the move.

If approved by the court, Parsons said, hebelieves the latest plan "would secure the financial future for the mine."

We certainly think the reward in this case is worth the risk.- Andrew Parsons

Parsons acknowledged that more public money in the range of$3 million is being put at risk.

"[But] we certainly think the reward in this case is worth the risk," he said.

"We think when it comes to the jobs and when it comes to the minerals, we think with all the benefits that come from this, we are absolutely willing to do this."

Canada Fluorspar is 100 per cent owned by California-based Golden Gate Capital, which has invested about $238 million US in equity financing since acquiring the company in 2014.

But earlier this year, the firm stopped pumping money into the mine, which has experienced challenges shippingthe ore to markets inUnited States, Europe and Asia.

So why is Parsons so confident that thislatest proposal can save the mine?

Because the minerals in St. Lawrence, and the assets needed to operate the mine, are very valuable, he said.

"We're going to work hard to make this as good an opportunity as possible for someone to come in and take this and hopefully do well," he said.

As for the $17-million loan to Canada Fluorspar, Parsons said there are no plans to write off that debt.

"The likelihood of repayment is dependent on the outcome of the sales process.In the case of bankruptcy or default of the $17-million loan, the province has a second security position over the company's assets behind Bridging Finance," he said.

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