chinese hit compass with $372m demand

Chinese hit Compass with $372m demand
16th June 2009, 6:00 WST

Collapsed copper miner Compass Resources faces a claim of nearly $400 million from its Chinese partner.

Joint venture partner and shareholder Hunan Nonferrous Corp is also understood to be running the ruler over Compass’ Browns Oxide copper project in the Northern Territory before deciding whether to throw the group a financial lifeline.

Five months after Compass collapsed with an estimated $70 million in debts, administrators have revealed the company faces $468.6 million in claims from unsecured creditors, including a disputed amount of $371.8 million from Hunan associated with the Browns joint venture.

Hunan is due to complete a review of Browns in August, when it is expected to make a decision on whether to take part in a recapitalisation of Compass.

At the same time administrators from Ferrier Hodgson are looking at other options, which may include selling Compass’ non-joint venture assets, including exploration tenements in WA, collectively or individually.

Ferrier has control of Compass’ non-joint venture assets while Hunan-appointed receivers Ernst & Young are in charge of the Oxide operations.

Compass called in administrators on January 29 after a collapse in copper prices, production delays at Browns and a dispute with Hunan.

The company’s creditors have since voted to put Compass into a 12-month deed of company arrangement.

Among Compass’ shareholders is 12.4 per cent backer New York hedge fund manager Phil Falcone, who made a fortune betting on Fortescue Metals Group.

Chairman Gordon Toll also chaired Fortescue before being succeeded by Herb Elliott. At the time of Compass’ collapse its shares were trading at just 15¢, valuing it at around $29 million. The stock traded at $3.20 about 18 months ago.

KATE EMERY