Crowflight’s Bucko mine back online

Vancouver – It has been a rough ride for Crowflight Minerals (CML-T, CMLGF-O) during the first couple months of commercial production at its Bucko nickel mine near Wabowden, Man.

Crowflight officially heralded in commercial production this June after having achieved average daily throughput of 647 tonnes during the month of May. In total that month it processed 20,041 tonnes grading 1.08% nickel.

Though well short of Crowflight’s 1,000-tonne-per-day target, the benchmark was a hopeful sign that mining at Bucko would soon put the company on a stronger financial footing.

But by early July those hopes were shaken when Crowflight announced ground control issues had surfaced in a stope access at the mine. The problem ultimately forced Crowflight to shutdown its mill while it drove in a new stope access.

Crowflight president and CEO Mike Kelly succinctly stated the unfortunate repercussion of the ground control issues in a July press release: “We have been disappointed in the ramp up of production to date and while we have seen steady progress, it has been slower than expected and has placed further financial pressure on the Company.”

The financial pressure came in the form of overdue payables of $7 million, including $5 million to its mining contractor, and a continuing operational shortfall in the forseeable future.

Fortunately for Crowflight, however, one of its major shareholders, Pala Investments Holdings, which then owned about 15% of Crowflight’s non-diluted shares, agreed to alleviate the company’s immediate financial woes by purchasing all of a 60-million-unit private placement for proceeds of about $15 million.

The terms of the agreement gave Pala 60 million shares at 25¢ a share – a 25% premium to Crowflight’s closing price on the day of the deal – and 30 million warrants each redeemable for half a share at 30¢ for two years. On an non-diluted basis the private placement increased Pala’s stake in Crowflight to just over 27%.

And most importantly for Crowflight the cash infusion meant it could make its overdue payments and still have enough left over to fix its problems at Bucko.

Now Pala’s support appears to have paid off. Crowflight announced Aug. 5 that by the end of July it completed a new stope access drift and that as of Aug. 4 milling had resumed at a rate of 1,000 tonnes per day.

On news of the operational mill at Bucko Crowflight’s share price gained 0.5¢ to 21.5¢. Crowflight has around 429 million shares outstanding.