Troubled junior copper producer Imperial Metals Corp. has kicked off a strategic review that may result in the sale of the company as it struggles under a mountain of debt.
In a Monday release, Imperial Metals said it will also consider selling assets piecemeal, entering into joint ventures or recapitalizing the company.
The Vancouver-based company, backed by well-known energy executive Murray Edwards, says it has taken a number of steps that give it financial breathing room in the short term. With a market capitalization of just $134-million, it has a debt load of roughly $857-million and a cash balance of $16-million as of the end of the second quarter.
Imperial Metals’ financial troubles stem from cost overruns during the construction of its Red Chris copper-gold mine in British Columbia a few years ago, which was financed with debt. At the time, cash flow from another property, the Mount Polley copper-gold mine, was supposed to help offset the capital requirements of building Red Chris.
But a catastrophic tailings dam failure in 2014 forced the company to suspend operations at Mount Polley for almost a year. It has also encountered various production problems at Red Chris since it started production in 2015, including persistent issues with recoveries.
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