London-based Anglo American plc, allegedly instructed Prairie River Minerals executives to fund their campaign

The general contractor and others who built a demonstration facility for a new scram mining business on the Iron Range have not been paid. The company is now facing foreclosure.

According to the News Tribune on Wednesday, Prairie River Minerals still owes Superior-based Lakehead Constructors Inc. nearly $2.4 million to construct its demonstration plant near Coleraine, which the company purchased out of bankruptcy in 2019 from two former Magnetation/ERP Iron Ore properties.

Prairie River Minerals

The money is still owed to Lakehead, which on Friday filed a complaint to foreclose on the mechanic’s and miner’s liens it put on Prairie River Minerals’ property in Grand Rapids, Michigan.  The $5.9 million demonstration facility built by Prairie River Minerals still owes Lakehead over $2.4 million. Both parties missed an agreed-upon September 25, 2021, deadline after Lakehead filed for liens on the land in February 2021 and then launched a lawsuit against the mining firm in March of the same year.

When Lakehead filed a lawsuit Friday, it said that “to date, Prairie River has failed to find any finance and money to pay-off the settlement obligations.” We believe Prairie River made misleading claims to Lakehead about its ability to get finance and funding, knowing full well that Prairie River would be unable to do so.

Prairie River Minerals claimed it was ramping up production by shipping samples of its product from the port of Duluth-Superior to an unnamed steelmaking business to test its ore recovery procedures on a smaller scale.  According to the March complaint, Prairie River Minerals managers allegedly informed Lakehead that a London-based mining business, Anglo American plc, was providing financial help.

According to a related complaint filed by Ferguson Enterprises LLC, a plumbing supply firm situated in Virginia, Prairie River Minerals owes $36,000 to the mining company.  Work on a demonstration plant was put on hold for six weeks in April 2020 because Prairie River Minerals “failed” to secure compulsory licenses from Minnesota’s Pollution Control Agency, Lakehead claims in its March complaint. Water and air permits were issued in September and November of those years, respectively. In December 2020, Lakehead completed the demonstration plant’s construction.

Lakehead began billing Prairie River Minerals for $5.9 million in July, and the company paid around $1.8 million of that amount before making its last payment in September.  Lakehead claims that business executives “lied to Lakehead at the commencement of the contract and throughout the Project in order to fraudulently entice Lakehead to work for (Prairie River Minerals) and to continue working after construction was underway,” in a lawsuit filed in March 2021.

As of that time, the company still owed Lakehead almost $4 million.  In June, Lakehead voluntarily dropped its case without prejudice after reaching a deal with the other company in the dispute.  Prairie River Minerals was due to pay Lakehead $4 million by the end of September 2021 under the settlement agreement terms. Despite this, Lakehead was only paid $1.7 million, leaving $2.4 million in outstanding bills.

So that it may apply its judgment debts to Lakehead, the lender wants the property repossessed, then auctioned by the county sheriff to pay off Lakehead’s claims.  A federal bankruptcy court allowed the Prairie River Minerals’ Jessie Loadout train facility for sale to MagIron, a new scram mining business, for $500,000 earlier this month.

Initially, Lakehead objected to MagIron’s purchase of the Jessie Loadout site, according to court papers, but changed its tune when it learned that its liens would not be affected.

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