Difficult Financial Situation for LNS-Owned Ruby Mine in Greenland
The photo shows the area in which Greenland Ruby has activity. (Photo: LNS)
The board of Greenland Ruby has applied for reconstruction of the company in an attempt to avoid bankruptcy. CEO Arnt Eirik Rørnes says increased interest rates, inflation, and high cost of living has made the market significantly more demanding in the past years.
The board of Greenland Ruby has decided to apply for a reconstruction of the company in an attempt to avoid bankruptcy.
A press release reveals that Greenland Ruby has not succeeded in attaining sufficient funds to manage the company's debt.
Greenland Ruby is licensed to extract gemstones in Greenland and has invested in facilities and infrastructure at the mining facility in Aappaluttoq. The majority owner of the mining company is the Northern Norwegian contractor Leonhard Nilsen og Sønner (LNS).
"Despite successful extraction of rubies and significant investment in facilities and the Greenlandic community, increased interest rates, inflation, and high cost of living have made the market significantly more demanding in the past years," says CEO Arnt Eirik Rørnes of Greenland Ruby.
Following more challenging economic times, the mining in Greenland was temporarily shut down at the end of 2022 to reduce the company's running costs.
The business could be sold
The restructuring includes appointing administrators who will cooperate with the company's management to find the best solution for the company's creditors and future. According to the press release, payments to the company's creditors will be postponed as this process is taking place.
The result of the restructuring could be the sale of the business to new, strategic owners, who could continue all or parts of the business. The proceeds from the sale would be spent to cover the costs associated with the restructuring and then to pay the company's creditors.
The company, in short
Greenland Ruby took over a license to extract gemstones in Greenland in 2016.
The majority owner of Greenland Ruby is Leonhard Nilsen & Sønner Eiendom AS, through the holding company LNS Mining AS.
The LNS group has been involved in ruby mining in Greenland since 2013, first as a contractors, then as the largest shareholder of Greenland Ruby in 2016.
Today's owners have invested close to NOK 1.5 billion in Greenland Ruby. According to the company, these investments have essentially been amortized.
Aims to avoid bankcruptcy
Furthermore, it is revealed that the reconstruction aims to avoid bankruptcy and to re-establish a competitive and attractive company.
The reconstruction will include market-oriented subsidiaries in the USA and France, in addition to Greenland Ruby's operations in Greenland. However, the service company in Thailand will not be directly covered by the reconstruction.
"The board has chosen to apply for a reconstruction because it still believes in Greenland Ruby and its operations in Greenland. Greenland Ruby is licensed to extract from one of the world's richest ruby deposits and has developed an innovative business model by offering certified and traceable gemstones of the highest quality in a global marketplace. The board also believes the company has an unrealized potential to create jobs and value in Greenland," concludes Rørnes.
The request for reconstruction has been delivered to the courts in Copenhagen and Nuuk, and the reconstruction process will start immediately. Greenland Ruby and the company's administrators are in close dialogue with the Greenlandic self-government (Naalakkersuisut) to ensure that the current rules and conditions are followed, according to the press release.
