Nordic Gold Corp. [NOR-TSXV; FIEIF-OTC] shares lost 38% of their value Wednesday February 13 after the company said it is experiencing liquidity and operational issues at its 100%-owned Laiva Mine near Raahe, Finland.
In a status update that triggered heavy selling of the shares, Nordic said these problems are due to a shortfall in tonnes and grades to the mill.
Nordic shares were down 38.5% or $0.025 to $0.04 on volume of 4.24 million, making it one of the most actively traded stocks on the TSX Venture Exchange. The stock was halted at 10.49 AM Pacific time.
Although the company said it was funded to production by a gold forward sale and loan, Nordic began operations with a working capital deficit and has continued operating with a working capital deficit to date.
“Over the last 14 months, significant efforts have gone into finding additional lenders and investors to remedy this situation, but these have been unsuccessful due to market conditions and the structure of the company’s financing,” Nordic said in a press release.
Until very recently, the company said it had hoped that its current financier and lender would provide additional financing, but this has not materialized due in part to operational issues and production shortfalls. As a result, the company is experiencing liquidity and cash flow uncertainties.
Nordic said the operational issues were caused by the under-performance of its mining contractor. “This has resulted in lower than expected grade and tonnage to the mill, causing the company to miss various milestones under the terms of its current financing.”
The company said it is working with the contractor to remedy these issues.
News of operational issues comes just two months after Nordic said it had completed the first gold pour at the Laiva Mine.
That was one year after Nordic acquired the operation for approximately $25 million in cash. Laiva is a conventional open pit mine with two pits. According to a Preliminary Economic Assessment announced in July 2018, Nordic is forecasting life-of-mine production of 456,600 ounces of gold over a six-year mine life.
The forecast is based on a measured and indicated resource of 335,000 tonnes at 1.132 g/t gold as well as an indicated resource of 3.4 million tonnes at 1.248 g/t gold. On top of that is an inferred resource of over 9 million tonnes, grading 1.531 g/t gold.
That material is expected to support average annual gold production of 75,981 ounces at an all-in-sustaining cost of US$974/oz. The PEA pegged the pre-production capital expenditure at $7.1 million.
Meanwhile, the company said it poured another doré bar (worth US$805,442) on February 5, 2019. To date, the Laiva Mine has produced 6,096 ounces of gold since the first pour on November 30, 2018, and received US$7.76 million in revenue from gold sales.
Nordic said it will process an additional 40,000 tonnes of ore through the mill at a grade of 1.1 g/t gold and expects to produce an additional 1,217 ounces by the end of February.
Nordic President and CEO Michael Hepworth said the lack of working capital and operational challenges have resulted in a slower than anticipated ramp up to commercial production. “The company is now examining all strategic alternatives to remedy this situation,” he said.