Imperial files for court protection (November 26, 2001)

Vancouver — Low gold and copper prices have claimed another victim as Imperial Metals (IPM-T) been granted protection by the Supreme Court of BC.

The move gives Imperial time to secure new financing and to potentially strengthen its balance sheet. Under a reorganization plan, the company proposes to split into two companies. Imperial would retain all of the company’s oil & natural gas and investment interests, whereas a newly created company, held by Imperial shareholders, would get its mining assets. Under the plan, the company’s convertible debentures and a portion of its secured debt is to be exchanged for shares. The unsecured creditors of the now closed Mount Polley copper-gold mine in north central BC, will receive full payment in cash if owned less than $5,000, while other creditors will get a combination of cash and shares.

The proposal will be tabled at a shareholders meeting slated for January.

For the first nine months of the year, Imperial lost $9.94 million, or 12 per share, compared with a loss of $6 million or 8 per share in the corresponding period of 2000. Revenues jumped to $95.5 million, up from the $70.3 million tallied last year. In the third quarter ended Sept. 30, the company lost $5.4 million, or 7 per share on revenue of $29.5 million.

Less than a year after acquiring a 100% stake in the Mount Polley copper-gold mine in a $11.5-million deal with Japan-based Sumitomo, Imperial suspended the operation. Payable over ten years, Imperial picked up the additional 47.5% stake it did not own by restructuring its debt and issuing up to $5 million of convertible debentures with an interest rate of 8% per year. The debentures mature at the end of 2006 and each 25 of the principal amount is convertible to one share. The maximum shares issuable upon conversion are 20 million, representing almost 25% of Imperial’s 80.5 million shares.

The Mount Polley open-pit operation cranked out 34.2 million lb. of copper and 83,194 oz. gold from its Cariboo and Bell pits in 2000. The average grade for the site is about 0.35% copper and 0.53 gram gold.

The only remaining operation for the company is a 50% stake in the Huckleberry copper-molybdenum mine. Located about 86 km southwest of Houston in west-central BC, the mine processes 21,000 tonne per day. Mine production began in 1997 with a projected mine life of 11 years.