Push to green energy motivates Australian company taking over Baie Verte copper mine

The new owner of the copper and gold mine on the Baie Verte Peninsula arrived in the area this week to inspect his purchase.

The Supreme Court of Newfoundland and Labrador approved the sale of the property to Australian junior mining company Auteco after former owner Rambler Metals and Mining entered bankruptcy protection last spring.

"We're really focused on Canada," said CEO Darren Cooke. 

"We've been looking around Canada for different assets that we believe have a huge potential to grow, and obviously we came across the opportunity at Baie Verte and really liked what we saw in terms of the potential to to have a a major copper project in such a great jurisdiction like Newfoundland."

Cooke says the property has much more potential than Rambler had exploited.

With the global move toward green energy, he said, the market for copper will only expand.

"What we're going to be doing is doing underground development," he said. "What we want to do is not necessarily start mining straight away, but build up the the future copper resource and really prove that we've got something. And then recommence mining once we've demonstrated that we've got a large scale operation."

Over the long term, he said, "the copper market is going to boom when everything moves into a decarbonized economy. You know copper is the critical element to be able to do that. So we see that long term there's going to be a huge demand for copper."

Pandemic worsened former owner's problems

Nearly 400 people on the Baie Verte Peninsula relied on the mine for work, as Rambler had been the largest private employer in the region.

Former owner Rambler got into financial trouble and filed for creditor protection after failing to fulfil its supply contracts. Ex-CEO Toby Bradbury said in a Supreme Court affidavit COVID-19 was at least partially to blame.

Cooke says he believes the problem was exacerbated by a lack of investment on Rambler's part.

Even though Auteco plans to expand and improve the Ming mine and the associated Nugget Pond mill, the change in ownership won't fix all the problems left behind.

Shareholders and local suppliers are listed as unsecured creditors, so the money they put into Rambler is gone.

"It's a significant loss," said shareholder Martyn Lewis. "We will continue to fight now through the courts, which will be our only recourse."

What we really want is to reset.- Darren Cooke

Lewis led a group of fellow shareholders in a bid to buy the company themselves, but that didn't work out.

"We got through to the second stage and unfortunately the timing … the financing was from the Middle East and the timing was conflicting with one of the religious holidays there and we couldn't get the proof of funds to be able to do the the acquisition," he said. 

Several supply companies are out millions of dollars as unsecured creditors, and several have taken legal action in an effort to get some of their money back.

In the end, Auteco bought the property for what the industry considers a bargain, at $65 million. 

While Cooke said his company won't resume mining right away, the 35 local people who are working in maintenance and security will keep their jobs, with more hiring to come eventually.

"So what we really want is to reset," Cooke said.

"To drill the ore body out properly in advance and to look at the options of building a bigger processing plant so we can turn this into a world class operation. And then we'll start to grow the employment levels as we move toward recommencing and and constructing a new mine."

Download our free CBC News app to sign up for push alerts for CBC Newfoundland and Labrador. Click here to visit our landing page.