UPDATE 2.45pm: Shares in embattled nickel miner Mirabela Nickel fell further today after it announced credit ratings agencies Standard & Poor's and Moody's had lowered their ratings on the company.
S&P downgraded its rating from B- to CCC+ while Moody's cut its rating from Caa3 to Caa1, with a negative outlook. The new ratings put the company's borrowing profile deep into high-risk, junk bond territory.
The downgrades will put more pressure on the debt-laden company, making it even more expensive and more difficult to borrow money to trade its way out of difficulty.
The downgrades follows the company's announcement yesterday that it may be set to default on its debt covenant after one of its two main customers announced it would terminate its nickel concentrate purchase agreement a year earlier than expected.
Last week, Mirabela announced that Brazil's Votorantim Metais Niquel would be closing its nickel smelting facilities because of the weak nickel price and would subsequently terminate its concentrate sales agreement with Mirabela at the end of next month.
Mirabela said yesterday the event might constitute a default under its $US50 million debt facility with Brazilian bank Bradesco, which might in turn trigger a default across a separate $US395 million unsecured note agreement with the bank.
Mirabela has always struggled to turn a profit at its flagship Santa Rita mine in Brazil because of production problems and, more recently, weak nickel prices.Shares in the company closed down 0.2 cents, or 16.67 per cent, at one cent after hitting an all-time low of 0.8 cents in intraday trade.