Labrador Iron Mines seeks court protection from creditors

Labrador Iron Mines seeks court protection from creditorsCanada’s Labrador Iron Mines Holdings (TSX:LIM) disclosed Thursday it is seeking court protection from creditors, becoming this way the latest victim of slumping iron ore prices.

The company, which owns assets in the iron-ore-rich Labrador trough in Eastern Canada, halted last year all operations in the area, home to one of the world’s largest high-quality iron-ore deposits. It is now seeking to complete a restructuring so it can eventually resume operations.

Iron ore mining in the Labrador Trough region of Canada has been a hard sell recently, despite the Quebec government's commitment of up to $19.2 million ($Cdn 20 million) for a feasibility study on a new rail link that would connect mines in the area to ports.

Big miners, such as Cliffs Natural Resources (NYSE:CLF) have fled the area as an ongoing oversupply in the iron ore market has crushed prices to record lows.

The Toronto-based firm also said its joint-venture partner, Tata Steel Minerals Canada, has exercised its option to buy LIM's remaining interest in the Howse project, which is also located in the trough, for US$4 million (Cdn$5 million).