Imperial Metals’ Mount Polley restart faces budget shortfall; announces $45M financing

Imperial Metals (TSX: III) will secure additional funds for the restart of its Mount Polley mine by way of a convertible debenture financing totalling $45 million. The mine, which had been on care and maintenance since 2019, is in the midst of the restart and operating at targeted production rates. The company had previously aimed to reopen the mine operation by the end of June.

However, the mine restart took longer than planned due to difficulties in hiring operating personnel, supply chain challenges and unanticipated electrical and mechanical work. This, together with lower copper prices, caused a shortfall in revenues compared to budget. In addition, Imperial Metals’ previously announced rights offering through which it had aimed to raise $53.7 million, was not fully subscribed, resulting in a shortfall in budgeted equity financing. 

The convertible debentures will have a five-year term ending Aug. 31, 2027. Each $3.20 of the principal amount will be convertible into one common share of Imperial Metals. Up to 14.1 million common shares are expected to be issued if all the convertible debentures issuable are converted. Murray Edwards, the company’s largest shareholder, has advised that he intends to purchase between $30 million and $35 million of the debentures.

Located about 56 km northeast of Williams Lake in south-central B.C., the Mount Polley copper-gold underground mine was first shut down in 2014 after a massive tailings pond collapse. Imperial had to rebuild the mine’s tailings and spent more than $70 million in environmental rehabilitation. Operations resumed two years later, but were halted again in 2019 due to a slump in copper prices.

In the week following the repair of a key electrical component on July 27, the concentrator at Mount Polley produced concentrate containing approximately 336,000 lb. of copper and 550 oz. of gold. That beat the company’s production estimates for the initial week following startup of 188,403 lb. of copper and 495 oz. of gold.