The federal agency that underwrites economic development in eastern Canada is owed $2.17 million by the former owner of a Newfoundland mining project that has been sold in bankruptcy proceedings.
The Atlantic Canada Opportunities Agency (ACOA) has been repaid $828,463 of the $3 million that Rambler Metals & Mining had borrowed since 2016, according to data provided through an access-to-Information request made by HBB.
Rambler was declared insolvent in April, meaning it was no longer able to pay its debts. Just today, Rambler Metals and its Green Bay copper and gold project, located in Baie Verte, were sold to Auteco Minerals Ltd., an Australian mining company, for A$65 million (C$56 million) in cash and stock.
The unpaid loans stem from what are known as "unconditionally repayable contributions." ACOA provided Rambler Metals with $2 million in 2016 to "optimize and expand the grinding circuit for a copper concentrator" and another $1 million in the form of Covid assistance in 2021. In 2022, Rambler received a $100,000 grant for "digital improvements," which did not have to be repaid. ACOA loans are generally interest-free.
"This is a prime example of why corporate welfare is at best a risky business," said Franco Terrazzano, federal director of the Canadian Taxpayers Federation, a critic of government spending. "Does the government expect to get any more money back, or will taxpayers be left holding the bag?"
In the response to the access-to-information request, ACOA did not say whether it expected any additional recovery from the Rambler Metals bankruptcy. ACOA is listed as an unsecured creditor by Grant Thornton, the monitor overseeing the bankruptcy, meaning the agency has no claims on the company's collateral and that further recovery, if any, would come through litigation.
Under the bankruptcy proceedings, "all creditors, including ACOA, must respect the legal process of the court order," ACOA said in its response. "Distribution of any resulting proceeds of the amount due to creditors will be administered in accordance with the court order by the court appointed monitor."
Auteco, based in West Perth, Western Australia, is also developing an Ontario gold mine 400 kilometers north of Lake Superior.
--HBB
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