Judge approves St. Lawrence mine sale process, with province committing up to $3.25M

There's still hope for the fluorspar mine in St. Lawrence following a hearingin St. John's that saw Newfoundland and Labrador's supreme court approvea multimillion-dollar planhalf of which will be funded with public moneyto temporarily secure the mine while a search commences for new ownersfor the insolvent operation.

It's called asales and investor solicitation process, or SISP, and it was approved Friday afternoon under the Companies' Creditors Arrangement Act by Justice Alexander MacDonald.

Some of the $6.5 million will be used to pay several dozen workers at the mine until early Julyto ensure the assets are maintained and protected, while the rest will be used to market the mine to potential investors.

A portion of the financing was approved Friday, while the remainder will be considered at a followup hearing on March 18.

Grant Thornton, which has been acting as the interim receiver since Feb. 21, will oversee the sales process.

The provincial government will contribute up to $3.25 million to the SISP, while the largest creditor, Bridging Finance, will cover the other half.

Last-ditch effort to save the mine

If this process is unsuccessful, the business will go bankrupt and its assets liquidated, and one of the largest employers on the Burin Peninsula will disappear.

But those involved with Friday's hearing expressed confidence that the mine can survive bankruptcyand that a new owner can restore the operation to profitability.

But it won't be easy. According to court documents, the company lost $30 million in 2020and $44 million in 2021.

And the business comes with a lot of debt: nearly $130 million, including $23 million to unsecured creditors.

The mine's troubles were blamed on challenges associated with the COVID-19 pandemic and production problems at the mine and mill.

In an affidavit to the court, Grant Thornton said an investment of cash to allow upgrades to the Blue Beach marine terminal, and improvements at the mine and mill, would set the stage for the operation to become profitable.

The fluorspar produced in St. Lawrence is known for its accessibility, high gradesand absence of impurities, andaccording to Grant Thornton, there has been interest from prospective new investors.

Fluorspar is an essential mineral to many industries and applications, including lithium ion batteries, solar panels, refrigeration and air conditioners, andglass for smartphones and electronic devices.

Board of directorsresign

It's the latest chapter in a difficult few years for Canada Fluorspar, which became insolvent in February after it ran out of cash and the entire board of directors resigned.

All but 45 of the 280 employees were laid off.

The operation became insolvent after the main shareholder, Golden Gate Capital, stopped pumping money into the operation. Since taking over the site in 2014, Golden Gate invested some $238 million, according to documents.

Bridging Financeis owed some $55 million.

It's the second time the provincial government has taken a gamble on the money-losing operation. In March 2017, a $17-million loan to Canada Fluorspar was approved, which remains outstanding.

On Thursday, Industry Minister Andrew Parsons defended the latest investment.

"All of our due diligence leads us to believe this is a viable opportunity,"Parsons said. "Everything we've seen leads us to believe that there is a future here for this."

Read more from CBC Newfoundland and Labrador