Indebted Baie Verte mine struggling with 'headwinds' due to scarcity of cash, lack of spare parts

A mining and processing company with extensive operations on the Baie Verte Peninsula is attempting to restructure its finances as it faces a cash crunch, one that's having a notable affect on production and staffing, according to the latest operational results for Rambler Metals and Mining.

Rambler is a U.K.-based company that produces copper and gold in Newfoundland and is listed on the London Stock Exchange. The company's stock value has plummeted over the past year, and it was suspending from trading in October because of uncertainties surrounding its financial position.

On Thursday, Rambler released its operational results for the quarter ending Dec. 31, with the company referring to "headwinds" caused by a scarcity of cash and production challenges stemming by a shortage of machinery parts and other goods.

The company also confirmed that talks with several secured creditors, including NewGen Resources Lending Inc., about a financial restructuring are ongoing.

The company acknowledged that the willingness of suppliers to do business with Rambler has been "tempered" by the uncertainty created by its financial instability, but that the support of the business community is "never taken for granted and is much appreciated."

The quarterly results paint a difficult picture for Rambler, which brought the Ming copper-gold mine into production about a decade ago and also operates a base and precious metals processing facility at nearby Nugget Pond. Both sites are located on the Baie Verte Peninsula.

Rambler also operates a bulk storage and shipping facility at Goodyear's Cove, near South Brook in Green Bay.

Rambler president and CEO Toby Bradbury could not be reached for comment. But he expressed confidence in the quarterly results, writing, "Total indebtedness in the company is far outweighed by the intrinsic value of its assets and operation, notwithstanding the lack of working capital and the ongoing default in respect of the loan from NewGen."

Bradbury also believes the mine can be profitable at the current scale if the cash crunch can be addressed.

"The opportunities for both production and resource expansion through further exploration remain but are placed on the back burner while the current financial challenges are addressed," he wrote.

He added that the level of production last quarter is a result of the commitment and resilience of the Rambler team "in the face of the challenges that the current lack of working capital creates."

The future of the company, however, is largely in the hands of NewGen, with Bradbury writing, "There can be no certainty at this stage that Newgen will agree to defer or reschedule the repayment of its loan."

Rambler announced in late 2021 that it has secured a three-year financing agreement with NewGen in the amount of $22 million US.

The first principal repayment was due to NewGen in October, but Rambler missed the payment deadline, triggering a default on the loan agreement. Rambler also stopped making interest payments last fall.

Despite the challenges, mining operations continued in all four production areas of the Ming mine last quarter, and an uptick in the copper market is also injecting some optimism into the operation.

"This further bolsters the viability of the Ming mine operation," said Bradbury.

The company sold nearly 6,000 tonnes of copper last year, a significant increase over the 3,418 tonnes it sold in 2021.

But Bradbury said production remains below expectations.

"The reasons for this are almost entirely attributable to the increasing working capital deficit during the year."

The Nugget Pond processing plant, for example, experienced more than 100 hours of downtime in the fourth quarter because of a shortage of cash, and delays in procuring parts that would normally be stocked onsite.

"Extended lead times for parts was exacerbated by the supply chain challenges experienced worldwide," Bradbury wrote.

Bradbury said there were "significant structural changes" at the company during the last quarter, with a reduction in what he described as "development teams" from 12 to four, and as a further "cash-saving initiative," further reduced to three "for the short-term."

It's not known what that means in terms of job losses.

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Reporter

Terry Roberts is a reporter with CBC Newfoundland and Labrador, and is based in St. John's. He previously worked for The Telegram, The Compass and The Northern Pen newspapers during a career that began in 1991. He can be reached by email at: [email protected].