Monarch volunteers for administrationFont Size: Decrease Increase Print Page: Print Andrew Main | July 11, 2008
From the Australian.
PERTH resource hopeful Monarch Gold Mining called in the administrators yesterday, three days after announcing it had obtained a "clear go forward funding package" to underpin its two West Australian gold projects at Mount Ida and Mount Magnet.
Monarch, whose managing director is WA mining identity Michael Kiernan, had been suspended at 29.5c a share since June 13 amid uncertainties about its future.
The Monarch board appointed Pitcher Partners' Bryan Hughes and Christopher Munday as voluntary administrators.
Mr Kiernan told The Australian last night that iron ore miner Territory Resources, Monarch's controlling shareholder and a company of which he was, until very recently, chairman, had required terms and conditions from Monarch in relation to the planned rescue package that the Monarch board "could not accept".
He is reported to have put $1.7 million into Monarch as recently as last Friday. And his own family had offered an interest-free loan of $15 million and had also offered to underwrite a $10 million capital raising for Monarch, which suggests that the rescue deal came very close to happening.
Mr Kiernan said last night that he had resigned from a number of boards to concentrate on the Monarch situation "when the fertiliser entered the ventilator" and Monarch began to run out of money.
Monarch's best asset appears to be the recently commissioned Mt Ida underground gold mine southwest of Leonora, which aims to produce 50,000 ounces of gold a year at a high average grade of 16 grams per tonne, and which administrator Bryan Hughes said last night he planned to keep going.
It employs about 150 staff and contractors.
The major problem appears to have been Monarch's Davyhurst open-cut mine near Kalgoorlie, which suspended operations about a month ago because of lower than expected head grades. Mr Kiernan said that the grade, which had been described as averaging between 2.5 and 3 grams of gold per tonne, had been closer to between 1.5 and 2 grams. Open-cut mines need much lower grades than underground, but that miscalculation almost halved Davyhurst's gold output.
Mr Hughes said this was now the third time he found himself the administrator of Davyhurst, which had belonged variously to Consolidated Gold, Croesus Mining and now Monarch. "That tells you what sort of a mine it is," he said, adding that it was "tantalisingly close" to being a going concern, but needed better delineation of reserves.
There was a report last night that Joseph Gutnick had been a possible saviour who had decided against investing -- to which he responded: "Absolutely not." He is now planning a US-financed fertiliser operation in central Queensland.
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