Nunavik mine owes $72 million to creditors; Chinese owners turn project over to Toronto bank
Canadian Royalties Ltd. owes $53.6 million to eight Nunavik companies
Canadian Royalties Ltd.’s Nunavik Nickel mine, which was to be Nunavik’s second operating mine, spinning out minerals for hungry markets abroad, appears so far to have left a trail of debt throughout Nunavik.
The creditors owed a total of nearly $54 million by the Chinese-owned mine include Nunavut Eastern Arctic Shipping, Desgagnés Transarctik Inc., the fuel division of the Fédération des Coopératives du Nouveau-Québec, Laval Fortin Adams, Iglu Construction and Nuvumiut Developments (Ganotec-Nunavumiut and Kiewit-Nunavumiut), which all have links to Nunavik Inuit organizations or individuals.
The construction firm Laval Fortin Adams is owed about $14 million, the largest amount of any of the Nunavik-based companies left holding the bill for work on the mine and docking complex.
L’Echo Abitibien says another $16.4 million is owed to Construction Promec de Rouyn-Noranda.
Now the Chinese owners of the mine have turned the cash-strapped Nunavik Nickel mine over to a private merchant bank in Toronto, which will see if there’s hope of salvaging the project, where workers are still stockpiling ore.
This is what the plan was last November: that Nunavik would soon see huge ice-class vessels sailing through Hudson Strait to bring nickel, copper, platinum and palladium to European markets.
After sinking $735 million into infrastructure, Jien Canada Mining Ltd., the Chinese company that took over Canadian Royalties several years ago, said it planned to ramp up production in early 2013, training and hiring more Nunavik workers.
The mine company, which expected to reach full production by 2014, was to remain in operation for at least 13 years.
Makivik Corp., which in 2008 received a $1 million signing bonus for the Inuit Benefits Agreement with Canadian Royalties, was to receive a second $1 million payment when the Nunavik Nickel Mine started operations this year.
After that, over the mine’s lifespan, the deal was to generate up to $80 million in benefits for Makivik and the three communities nearest the mine, Puvirnituq, Salluit and Kangiqsujuaq.
The IBA also gave Inuit priority on jobs worth about $14 million or more a year as well as other spinoffs valued at least $50 million.
But these benefits are unlikely to flow, at least in the near future.
The Toronto private business bank Forbes and Manhattan took control of the project July 19.
The bank’s website says it “seeks opportunities in the global resource sectors where we can unlock significant value by increasing exploration, proving up resources, moving projects through development into production, and arranging growth capital.”
The bank is restructuring the project after Jien Canada Mining Ltd. couldn’t get the money it needed to bankroll the project out of China, Les Affaires reported Aug. 13.
Following the July resignation of president John Caldbick, Forbes and Manhattan named a new president and executive director, Parviz Farsangi,
“We will try to come up with a plan to run the operation in a stable and viable way,” Farsangi is quoted as saying in Les Affaires. “That’s all I can say.”
Jien first became interested in Canadian Royalties in 2009, when Chinese interests were taking advantage of low metal prices by going bargain hunting for financially-troubled western mining assets.
Jien took over the formerly Canada-owned junior mining company with a takeover bid worth $192-million, acquiring 75 per cent of the company’s project shares, while 25 per cent of the shares stayed with the Vancouver-based Goldbrook Ventures.
Then, Jien fought with Goldbrook until early in 2012 when Jien finally bought out that company’s interest in Canadian Royalties for $100 million.
News that the Nunavik Nickel mine, which was supposed to bring more wealth and jobs to Nunavik, has hit a wall after causing many environmental impacts makes some in Nunavik uneasy: they recall the now-defunct asbestos mine at Purtuniq, which operated during the 1960s and left a toxic mess behind.
Xintyi Tan, the executive assistant to the president of Canadian Royaltyies, took a call from Nunatsiaq News Aug. 6, which requested information about the mine’s status, but Tan only said that management would have more to say soon, maybe in a few months, about the future of the mine.
Mining observers have been critical of the lack of communication from Canadian Royalties before. A mining website called “North of 56” criticized Canadian Royalties in 2012 for the lack of information on its website.
“This is not a normal practice in North America, particularly for investor owned companies,” the North of 56 website said. “It sets a bad example for Chinese companies operating in North America to share no information publicly about its mining project. This is a major mine going into northern Quebec and the company need to be transparent about the project.”