Judge approves $110M loan to keep Mary River mine operating through summer

Baffinland will stay operational through the summer after an Ontario Superior Court judge approved its request for a $110 million loan.

Now, after Justice Jana Steele heard submission from several lawyers in a downtown Toronto courtroom on Wednesday, she must decide who will provide that loan.

Baffinland Iron Mines Corp., which operates the Mary River iron mine on northern Baffin Island, announced May 15 it was applying for creditor protection. At that time, the company owed $2.6 billion to 231 creditors.

Baffinland is seeking $450 million to get it through December 2027, but said it needed a $110-million “bridge loan” that would help the company stay afloat in the interim.

On Wednesday, Steele heard arguments from lawyers who represented two different groups that want to provide the $110-million loan. They are Export Development Canada, a Crown corporation owned by the Canadian government, and a group of private lenders.

Three groups had submitted proposals to provide the funding, but one of those submissions was not deemed viable.

Baffinland lawyer Derek Ricci said Export Development Canada put forth the best offer. The other group submitted an inferior bid, then several days later revised it to match the Export Development Canada proposal, Ricci said.

“As a matter of principle and fairness, that should not be encouraged,” Ricci said of the revised proposal. “The better bid should prevail.”

Ken Rosenberg, a lawyer representing the International Union of Operating Engineers Local 793, agreed, saying in court that Steele should side with Baffinland’s preferred lender.

“There is much more transparency and clarity with [Export Development Canada],” he said. “It’s from the Government of Canada. It’s not just an economic staple.”

Christopher Besant, co-counsel for the Qikiqtani Inuit Association and Nunavut Tunngavik Inc., also spoke favourably of the Export Development Canada proposal. 

Darvel Murdoch, a lawyer representing the private group of lenders, argued secured creditors should be allowed to submit a comparable bid to Export Development Canada.

After listening to several hours of lawyers’ submissions, Steele said a quick decision, as early as Thursday, is necessary.

All parties have agreed to a meet again June 30 in Toronto to decide the fate of a larger, $450-million loan that would keep the Mary River mine running until December 2027.

Baffinland is Nunavut’s largest private-sector employer, with approximately 1,200 people on its payroll, 300 of whom are Inuit. The corporation generates almost 25 per cent of the territory’s gross domestic product.