Struggling miner Mirabela Nickel says it is in discussion with financiers to come to an agreement that will allow it to avoid defaulting on its obligations.
In its first substantial market update in weeks, Mirabela said it had engaged advisers to help it restructure its debt to reduce the burden on the company.
Mirabela diclosed that its cash on hand had fallen to just $US53.7 million as of October 29, compared to $US108.1 million at the end of June.
Mirabela said that, given the weakness in the nickel sector and its current cash burn, it was vital any restructuring of its debt was paired with a capital injection.
The company disclosed late last month it had missed an interest payment relating to $US395 million of 8.75 per cent senior unsecured notes due 2018.
The non-payment of interest will constitute a default if payment is not made within 30 days of its due date.
The company said it was in full compliance with its continuous disclosure obligations, and that it would provide a further operational update later this month.
Mirabela suspended its shares from trading last month and said this week it would update the market on a monthly basis.
The Brazil-focused miner downgraded its production forecasts for the second time in three months in a company update in September, and has since seen its share price plummet from 6.1 cents to just 1.6 cents at last trade.
Mirabela said last month that one of its two customers, Vorantim Metais Niquel, intended to close its smelting facilities from November due to the weak market conditions, terminating the concentrate sales agreement between the two companies at that time.
It also disclosed that it was operating at a cash loss.
Mirabela has flagged that Vorantim's closure of its facilities could trigger a default in a seperate $US50 million debt facility held by a Mirabela subsidiary.
The miner’s debt rating has subsequently been lowered by Standard & Poor's from B- to CCC+ and by Moody's from Caa3 to Caa1.
