Cline Mining (TSX: CMK), which had to idle its in-development New Elk deep coal mine in Colorado a few weeks ago, said Dec. 18 that it was unable to make the semi-annual payment of interestof US$2.5m that was due on Dec. 17 on its outstanding US$50m principal amount of 10% senior secured bonds.
The company said in the brief statement that it has been in discussions with Marret Asset Management Inc., which represents the bondholders, and is considering the options available to the company.
Cline, through its subsidiaries, has metallurgical coal property interests in Colorado. It also is the plaintiff in a legal action against the British Columbia government with respect to the loss of rights under coal licenses relating to certain properties in southeastern British Columbia, along the Montana border. That ban was in a deal with U.S. officials to protect a cross-border watershed.
Canada-based Cline Mining said Oct. 15 that the company had three major objectives at that point for New Elk: to sell the company’s stockpile of metallurgical coal, to secure long-term sales contracts, and to restart production at the New Elk deep mine in southeast Colorado at the earliest opportune time.
Ken Bates, President, CEO and a Director of Cline Mining commented at that time: “Current market conditions for coal producers continue to be challenging. Demand continues to be weak in the metallurgical coal market with prices declining across the board. … Cline’s New Elk Mine is a major metallurgical coal mine with a large resource base of over 618 million short tons of metallurgical coking coal in place. During the short-term, the Company must navigate this difficult market by conserving its cash resources, raising In addition to its working capital requirements, the Company must secure sufficient funding to continue developing and expanding the New Elk Mine and keep its mineral claims and title in good standing.”