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Construction company wants its due as mine waits out prices

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A Manitoba construction company caught up in the mining industry slowdown caused by declining metal prices has been stuck with unpaid invoices for work on a northern Manitoba nickel mine that's temporarily shut down.

Terry Hendrickson, of Hendrickson Construction in The Pas, said his company has "been crippled" by a $400,000 outstanding invoice for work his company did at CaNickel Mining Ltd.'s Bucko Lake nickel mine near Wabowden.

Hendrickson has a $400,000 builders lien on the property but he said he has been frustrated in his efforts to get paid for work his company did in the construction of a paste plant at the mine site last year.

The paste plant produces concrete that's used to provide engineering support for underground work.

Hendrickson's company acted as the general contractor for the $6-million project that was completed in the spring of 2012.

The work was completed shortly before production at the mine was halted last summer, then officially put on temporary "care and maintenance" -- effectively shutting down.

Hendrickson's company had done work on some of the surface construction projects at the mine when it was originally being built in 2007. At that time, the company that owned the mine was called Crowflight Minerals Inc.

He had to place builders liens to secure payment for his services then as well.

Hendrickson was the project manager of the paste plant in charge of engineering, procurement and construction management as well as the general contractor.

In a recent interview he said, "I did all this for them and I got shafted, big time." He said he was paid for about eight months into the project but then payments were halted.

Over the course of the previous year, two affiliated companies based in China -- King Place Enterprises Limited and Hebei Wenfeng Industrial Group Limited, a Chinese steel producer -- had injected several million dollars into Crowflight through various debt and equity financings and now have a controlling stake in the company.

In June 2011, Crowflight changed its name to CaNickel Mining Ltd.

In May 2012, the company received a stop work order from Manitoba's Workplace Safety and Health Division to cease blasting operations at the Bucko Lake mine. At the time, the company said it was reviewing mining techniques used.

But when the stop work order was lifted in July 2012, the company decided to put the mine on temporary care and maintenance because of unfavourable nickel prices.

From early 2011 to July 2012 the global price of nickel fell to about $7.50 from about $12.50 per pound.

Nickel was trading at about $6.18 on Monday.

Ed Huebert, executive vice-president of the Mining Association of Manitoba, said slumping metal prices create all sorts of challenges in the industry. Last week, there were reports some of the largest mining operations in the country were scaling back investment.

As to CaNickel's status, Huebert said, "It does not mean it will not return, it just means these prices are not good right now."

Derek Liu, CaNickel's chief financial officer and corporate secretary, declined to comment specifically on the Hendrickson Construction matter.

The company is expected to release second-quarter financial results later this week.

Republished from the Winnipeg Free Press print edition July 31, 2013 B8

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