North American Tungsten will temporarily shut down operations at its Cantung mine on the Yukon/N.W.T. border at the end of October.
In a letter to the Mackenzie Valley Land and Water Board, the company explained that it hopes operations will resume in the summer of 2016, “if economic and market conditions improve significantly.”
North American Tungsten went into creditor protection in June, after revealing it owed $79.5 million to 237 companies.
In July, it permanently laid off 50 employees and borrowed $3 million to keep the mine operating until the end of October.
John Sandrelli, a lawyer representing the mining company, said the mine was planning to shut down this fall, and the closure is happening as expected. The mine will go into care and maintenance at the end of November.
North American Tungsten began to look for buyers for its struggling mine in July. Sandrelli said the company is expecting to hear from interested buyers by the end of September.
When the mine will resume operations, he said, “depends in large part upon the outcome of the sale process.”
So far, few details have been made public about potential buyers or investors, barring one.
At the end of August, three of North American Tungsten’s directors, including its chief executive officer and chief financial officer, announced they were involved with an investment company that may offer to invest in or buy the mine.
CEO Kurt Heikkila, CFO Dennis Lindahl, and director Ron Erickson are all involved with Queenwood Capital Partners, currently one of North American Tungsten’s secured creditors.
Since the announcement, the company’s court-appointed monitor has modified the sale and investment process so that these three directors will not receive copies of any other bids. The monitor will now oversee the process with no input from the three directors, to try and prevent any conflict of interest.
Aside from the sale process, the mining company still has other financial dealings to sort out.
In July, the company received notice from one of its two tungsten customers, Global Tungsten & Powders Corp. (GTP), that it was going to withhold payments of about $1.6 million for shipments of tungsten concentrate. GTP said it was reclaiming money owed to it from a loan issued to North American Tungsten in 2013. At the time, North American Tungsten warned that if the payments were not made, it would likely be unable to make payroll and might not be able to continue operations.
Since then, GTP has been ordered in court to pay the mining company for the shipments. It has done so, but it continues to fight the issue in court. Its next appeal date is set for Wednesday.
In the most recent monitor’s report, it appears that North American Tungsten made $2 million less than expected on tungsten sales between early June and early September. That’s because the mine produced less volume than expected, and because some of the product “did not meet contract specification requirements for the existing customers.”
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