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Nordic Mining, a mining company, is facing operational challenges and needs money, as it awaits a decision from the state on a temporary discharge exemption. The company is in talks with bondholders and shareholders, as well as potential buyers looking to renegotiate contracts. Nordic Mining CEO Finn Ivar Marum described this as one of the most challenging quarters for the company in a presentation on Tuesday.

In August, the company announced operational challenges and the need for short-term capital of $10-15 million, or up to 141 million kroner. The company requires nearly half a billion dollars to continue ramping up production. Marum emphasized that the end station is the same and that Engebø is a top modern plant that will deliver important raw materials to the market and generate cash flow when fully operational.

The company's production of granat accounted for 20% of capacity and rutil production 14% of capacity in the second quarter, according to Nordic Mining.

The company has not succeeded in contacting CEO for further questions. In its quarterly report, the company noted that several buyers are demanding new negotiations on the price of rutil and granat from Engebø. When it comes to granat, buyer Barton accepted a delivery in February but not one in May. Marum, the commercial director at Nordic Mining, stated during the presentation that the statement that the material was too dusty is under review, and the company is evaluating what to do with the product if it is determined to be too dusty. They believe it has commercial value and can be cleaned.

According to financial director Tord Meling, Barton has so far not wanted to pay for the May delivery. Nordic Mining had no revenue in the second quarter. Meling said the timing and outcome of this payment are still uncertain. The company has set aside 10 million kroner to cover potential costs to buyer Barton if it fails to deliver the agreed amount of granat by mid-December.

Nordic Mining is in talks with the buyer regarding this. The company also has an agreement with an American pigment producer. The buyer has the right to cancel the agreement as the latest deadline for starting regular deliveries has passed. "The buyer has not notified of cancellation and has only notified that they wish to reconsider the pricing mechanism.

Discussions on a new pricing mechanism are expected to conclude before the new year," Nordic Mining wrote in its quarterly report. The last date for starting regular deliveries to Japanese Iwatani was in June, but has been moved, according to Nordic Mining. "In June, we agreed with Iwatani to move the latest date for starting regular deliveries to December 31, 2026," Marum told during Tuesday's presentation.

When Engebø plant is fully operational, it is expected to generate a cash flow of 480 million kroner per year. "We have had more difficult progress than we expected," said Marum. "Therefore, we see a capital need through 2027 of about 475 million kroner," Marum said. Nordic Mining had a balance of 150 million kroner at the end of the second quarter.

"150 million kroner at the group level is not enough to support the operation during ramp-up without additional liquidity," said financial director Tord Meling. Analyst Rune Tryti from Sparebank1 Markets has previously followed Nordic Mining, but the brokerage no longer recommends the stock. "The company is struggling to get production up to full speed, it took longer than expected.

And now they have a capital need in the short term that they must solve. At the same time, they are awaiting a temporary discharge exemption," Tryti said. Nordic Mining recently received a bank payment for August until September 4. After that, the company expects to have sufficient financing, unless further steps are taken to strengthen its capital, according to Nordic Mining's quarterly report.

Bondholders have hired SRK Consulting to conduct an independent technical assessment of operations and the plan for ramping up production, the company noted. The outcome could affect financing, Nordic Mining noted. Discussions on long-term financing continue. "Debt is too high, so discussions will take place with both bondholders and shareholders on long-term solutions for the company," Meling said.

Nordic Mining faces challenges in separating, water quality, stabilizing the ore feed, and disposal of minerals. Marum said among other issues, elements of the equipment at the end of the process line are not functioning as they should. New equipment is now being installed in hopes of solving the challenges. "The momentum is there, but it's slower than the originally planned," Marum said in a presentation on Tuesday.