NEMI bails on $36m financing

Vancouver — NEMI Northern Energy & Mining (NNE.A-V) has cancelled a planned $36-million private placement earmarked for development work at the Trend coal mine near Tumbler Ridge, B.C.

The financing was supposed to have involved a syndicate of underwriters who were to buy 20 million units priced at $1.80 apiece for proceeds of $36 million.

However, lead underwriter Salman Partners informed NEMI it was unable to market the offering at the agreed price.

The company says the Trend mine is nonetheless still scheduled to start producing later this year.

Meanwhile, a Japanese trading company will provide NEMI with a $20-million loan, which can be converted into NEMI shares at the lender’s option.

NEMI has granted the lender rights to certain assets, as security, plus exclusive marketing rights in Japan for all the company’s coal products. The lender also has the right to market coal in certain markets outside of Japan, and will receive a marketing fee for its services.

The Trend metallurgical coal deposit was granted production permits in May and is expected to produce 240,000 tonnes in each of its first few years. Larger-scale production of 1.5-2 million tonnes is envisaged starting in 2007. Toward that end, a feasibility study is under way, to be followed by environmental assessment.

Trend has an indicated resource of 84 million tonnes in three zones. The deposit is subject to a 1% production royalty.

Following the withdrawal of the financing, shares in the prospective coal producer fell 8%, or 12, to close at $1.35. NEMI has a market capitalization of $62 million, based on 45.9 million shares outstanding.