Article online just now in The Advocate newspaper in Tasmania: This is the text of the article
Angry shareholders lining up to reject Avebury mining deal
By Sean FordAngry shareholders are lining up to vote against a deal involving the Avebury Nickel Mine's owner, in a move that could speed it on the road to administration.
Mallee Resources Limited returned the West Coast mine to production last year after a long period of care and maintenance, but has been unable to get it to nameplate production levels so far and is strapped for cash with limited options.
A mine closure would cost about 180 West Coast jobs.
The proposed deal - supported by the Mallee board - would deliver big shareholder, offtake partner and key lender Hartree Metals warrants it could use to take its share of Mallee past 50 per cent, giving it effective control.
Hartree is seen as unlikely to provide further loan funding if the deal does not go ahead, with an independent expert dubbing the proposed warrants deal as "not fair but reasonable".
The non-Hartree shareholders must now choose between backing the deal
- which would decrease the value of their holdings - or voting no and potentially blowing up Mallee and likely leaving the mine shuttered again.
A group of shareholders with a combined stake of about 20 per cent in Mallee has vowed to vote against the deal.
They say they are seeking legal advice.
They blame Hartree for Mallee's financial difficulties.
"Hartree's attempted takeover is putting the future of the Avebury mine, the local workforce and its suppliers and contractors at great risk," shareholder group spokesperson Kalenn Amand said.
"From day one of Mallee Resources' ownership of the Avebury mine, Hartree's loan terms are constantly of short duration and with very high renegotiation fees."
Mr Amand said Hartree should not be portrayed as some sort of white knight.
"They prevent Mallee Resources from using any of its returning capital from Myanmar to build or maintain the plant," he said.
"Hartree also could have offered funding 12 months ago at fair commercial terms and, under that scenario, Hartree, Mallee Resources, its contractors and suppliers and its mum and dad shareholders would now be all rolling along happily as the mine would be making money."
Mr Amand said Mallee could not make a corporate transaction to strengthen Avebury because Hartree held its entire offtake deal.
"And why has Hartree blocked Mallee Resources from seeking a potentially better funding deal to underpin the company and the mine's future?" he said.
"If they truly cared about the future of the mine, its hundreds of employees, contractors and suppliers, as well as the company's mum and dad shareholders, they would be working with, not against, Mallee Resources in seeking the best funding deal to secure the long-term future of the mine."
He said the proposed deal was neither fair nor reasonable.
State Minister Roger Jaensch said the government was in constant contact with Avebury and was aware of the current situation.
"The mine is an important component of the mineral landscape and we want it to continue to have a strong future," he said.
