The government of the Northwest Territories has purchased North American Tungsten’s Mactung property on the Yukon/N.W.T. border.
The agreement was reached after the company failed to find any suitable buyers for the property or for its existing Cantung tungsten mine.
North American Tungsten received creditor protection on June 9, after revealing it owed $79.5 million to 237 companies. It began to look for buyers in July.
According to a report published by North American Tungsten’s court-appointed monitor, three qualified bids were received by the end of September. But the monitor and two of the company’s major creditors, Callidus Capital Corporation and the government of the Northwest Territories, decided those bids were unacceptable.
In an email, N.W.T. cabinet spokesperson Andrew Livingstone confirmed that was because of the “low nature of the bids.” The report explained that the government would have “incurred a significant shortfall” on the amount it was owed if one of the offers had been accepted.
Instead, the government agreed to purchase the Mactung property for $4.5 million, a higher price than any of the bids had offered, according to the monitor’s report.
The report stated that $4.5 million is “vastly less” than the amount the government is owed, “estimates of which range from approximately $15 to $28 million.”
Currently, the government says it plans to keep the property until tungsten prices rise.
“The price is expected to rebound in the future and the GNWT will attempt to find a suitable company to invest and advance the Mactung project,” Livingstone wrote. The property is the world’s largest tungsten deposit outside China.
According to a government news release, the decision had to be made during the territory’s election campaign due to the “pace of proceedings in the B.C. Supreme Court.”
However, the Northwest Territories government has not taken over the Cantung mine, which ceased operations on Oct. 26. Instead, it transferred the abandoned mine to the federal government, which it’s allowed to do under the territory’s devolution agreement.
The Government of Canada will pay the care and maintenance costs of the mine through the end of March 2016. Those costs are expected to be at least $1.8 million. The territorial government will also transfer the security payments it received from the mining company for the reclamation of the mine site to the federal government.
Most of North American Tungsten’s remaining employees were laid off this week, though eight have been kept on to help with care and maintenance of the mine. The company’s directors and officers - Kurt Heikkila, Dennis Lindahl and Ronald Erickson - also resigned this week.
The Cantung mine is located 300 kilometres northeast of Watson Lake, near the Nahanni National Park Reserve and close to the Yukon border. The Mactung property is also on the border, about 160 kilometres northwest of the mine and just north of the Canol Road.
Contact Maura Forrest at
maura.forrest@yukon-news.com