At the end of 2012, upon completion of several project milestones and in connection with finalizing the detailed bottom-up budget, it became obvious that the Company was facing need of additional funding to cover higher than expected capital expenditures for the installation of the first and second process lines and logistics, as well as higher initial operating expenditures for the first two years. The intention was to complete the funding by a combination of an equity issue and a bond tap issue during January 2013. However, the reaction from the market had a severe effect on the Company's share price and the Company decided to withdraw the contemplated transaction on February 5, 2013. To safeguard Northland's assets and operations as well as the interest of its stakeholders, the Company filed for reconstruction for its Swedish subsidiaries where the Kaunisvaara project is legally held.
On February 21, 2013 Northland received consent from the necessary majority of the bondholders for a release of USD 6 million out of the USD 72.6 million held in an escrow account by the bond trustee. This support together with discussions with the key suppliers to reduce burn-rate will enable the Company to continue its production at Kaunisvaara and transport the iron ore concentrate to Narvik beyond March 4, as previously contemplated.
The Company is now undergoing a challenging period, but I am convinced that we soon will be able to present a long term financial solution to ensure the Company a strong base for continued development of the Company and the Kaunisvaara project. It is important to remember that Northland has considerable assets consisting of ore reserves, a reliable infrastructure and a vital operation that is producing 3-4,000 tonnes of high grade concentrate per day. We also have a strong end-customer base to ship to, such as our first customer Tata Steel in the Netherlands.
Our main focus now is to solve the liquidity shortage, optimize the logistics chain and reach full production in 2014".
Significant events during 2012January-March-- Capital raise consisting of equity (USD 325 million) and a 13% interest bond (USD 350 million)-- Start of the Pitkajarvi trans-loading terminal ground workApril-June-- Signed final logistics agreements with Savage, Peab and Grieg-- Logistics agreement signed with Green Cargo-- USD 40 million Cost Overrun Facility with Standard Bank was signed-- Building permit granted in Pitkajarvi-- Finalized financing for drill rigs and mobile equipment-- First delivery of mobile equipment from Caterpillar, mills from Metso and drill rigs from Atlas Copco-- First drawdown under the 13% Bond LoanJuly-September-- Second drawdown under the 13% Bond Loan-- Northland received confirmation of the four requested daily slots on MalmbananOctober-December-- First ore blast in the Tapuli mine-- First concentrate produced-- Dispensation for 90 tonnes trucks granted-- Third drawdown under the 13% Bond Loan-- Logistics chain proven when the iron ore concentrate reached the port of Narvik-- Full disbursement of USD 20 million bond from the additional 12.25% Bond LoanSignificant events January 1, 2013- February 26, 2013-- The Company is currently in a challenging financial situation following the withdrawal of the planned long-term funding. As a consequence, the Company is experiencing a liquidity shortage and resolved to safeguard its main operations, held in its Swedish subsidiaries (Northland Resources AB (publ), Northland Sweden AB and Northland Logistics AB by filing for corporate reconstruction. A creditors' meeting will be held on March 1, 2013, at the Lulea District Court in Sweden. At the creditors' meeting the appointed administrator will provide information on how the reconstruction is proceeding.-- On February 18, 2013 the Company received notice from the Toronto Stock Exchange (the "TSX") that they had decided to delist the Company's common shares effective at the close of market on March 15. This is due to the above described reconstruction. The Company's common shares have a dual listing on the Oslo Bors (the "OSE"), ticker NAUR, and trading on the OSE will continue at the OSE's discretion.-- Eva Kaijser will, after her twelve months maternity leave, resume the position as Chief Financial Officer ("CFO"), effective March 4, 2013. Mrs. Kaijser replaces the Acting CFO, Peder Zetterberg, as planned.-- Ramp up of production has been successful and to date Northland has produced approximately 65,000 dmt of iron ore concentrate with 69 percent Fe-grade and quality in line with planned specifications.-- Approximately 55,000 tonnes of iron ore concentrate is being shipped to Tata Steel, IJmuiden, the Netherlands.