Imperial Metals Delay May 20, 2015

A geologist takes notes at Imperial Metals’ Red Chris copper-gold mine, in northwestern British Columbia. Credit: Imperial Metals

In danger of breaking a loan covenant because of a slow ramp-up at its Red Chris copper-gold mine, in northwestern British Columbia, Imperial Metals (TSX: III) is turning once again to its largest shareholders for financial help.

One of the clauses under a $200-million senior credit facility for Imperial’s Red Chris stipulated that the mine was supposed to reach commercial production by June 1. However, a lack of water caused by a late spring runoff has delayed plant commissioning by about a month and the company needs additional funds to see it through to commercial production. First production was achieved in February.

Oilsands financier N. Murray Edwards, who controls 36% of Imperial’s shares, has agreed to provide the company a short-term loan of $30 million bearing 12% interest through Edco Capital. Imperial is planning an $80-million rights offering to repay the Edco loan, which is due in six months, to support the Red Chris ramp-up, and help advance its Mount Polley mine back to production.

Terms of the rights offering have not been announced, except that it will include units comprised of a combination of common shares and convertible debentures. Before it can proceed, however, the company has to negotiate an extension on the completion requirement for Red Chris from its creditors.

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