$750K down payment to buy Wabush Mines due Monday

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The future of Wabush Mines will become a little clearer on Monday — that's when companies interested in purchasing the shuttered operation are required to have a $750,000 down payment ready.

"We're prepared as a government to work with any company that comes forward with a proposal that makes sense," Labrador West MHA Graham Letto told CBC's Labrador Morning.

"If we were successful in getting a new company to come in and restart Wabush Mines that would be a significant issue for us and would certainly bring back Labrador West to where we were three, four, five years ago."

Price tag unknown

Wabush Mines is currently locked in creditor protection under the Companies' Creditors Arrangement Act (CCAA).

While the down payment amount is set, the full price tag for Wabush Mines isn't yet known.

"It all depends, I guess, on the market conditions and the price of iron ore and the demand," said Letto. 

He referenced the sale of Bloom Lake as a recent example. That iron ore mine 400 kilometres north of Sept-Iles, near the Labrador border, was purchased for $10.5 million in late 2015, with the buyer also assuming $42 million in environmental liabilities.

Prior to that, it had been acquired for $4.3 billion as part of a takeover in 2011 by Cliffs Natural Resources — the same company that ran Wabush Mines.

"When you look ... at Bloom Lake, which is a fairly new piece of infrastructure, and you compare that with Wabush, I'm not sure what the price tag would be," Letto said.

"I wouldn't think it would be any more than what we saw for Bloom Lake. I would say it would probably be less than that."

Interested companies

There are four interested parties, according to the CCAA report.

The first one, MFC Industrial, tried to purchase Wabush Mines previously but talks broke off with then operator, Cliffs Natural Resources, in 2014.

Alderon Iron Ore Corp. also interested, according to the CCAA report. The company has a mine in the area and has proposed buying parts of Wabush Mine to use its pit as a tailings dump.

That specific proposal was declined, but the report still includes Alderon in its list of interested parties.

The other two companies in the report are unnamed.

The CCAA protection is expected to end on June 30.