Hi Joelstar I’ll be there in spirit only, if you’ll have me. -...

Hi Joelstar I’ll be there in spirit only, if you’ll have me.
- too shy, too much averse to air travel and family in the Eastern states with priority calls for when I DO galvanise more air travel …

(But it will definitely be BUSINESS when I do organise time interstate again thanks to Simon et al)​

But yes to the AGM … maybe/probably and please include me in (in spirit) in the toast to Simon and team, you, Wassa, Spec and all
… and not forgetting Jules please - NRW may not have been able change the direction here, but it did keep the company ticking over through administration and re-listing, and that re-listing may never have happened without Jules, Sparta and Investec blocking the straw man takeover attempt of GCY from the Habrok crowd who almost got it for around $300,000.…
.... If not for (and a special toast to) the clear-visioned Justice Beach.

(For anyone with an interest here’s a link to an October 2021 post on GCY with a bit of an IMO summary up to that time https://hotcopper.com.au/posts/56812316/single
And a repeat of a more interesting detailed story in the spoiler from the AFR in 2020 on how GCY was almost lost over a purchased debt of less than $620,000 by a crew renown for somewhat unscrupulous tactics …

Spoiler : A crucial time

How a $600,000 debt could have sunk a $292m gold mine

https://www.afr. com/companies/mining/how-a-600-000-debt-could-have-sunk-a-292m-gold-mine-20201124-p56hd7

Mark Rowsthorn and Simon Raftery used a slice of debt to try to liquidate a West Australian mine which hoped to produce 400,000 ounces of gold in seven years.

Aaron Patrick Senior correspondent
Dec 3, 2020 – 12.01am


On March 11, a few days before Melbourne entered the first stage of its epic pandemic lockdown, one of the city's most experienced corporate executives, Mark Rowsthorn, arrived at a discreet city restaurant to buy a gold mine.
The Toll Group co-founder, former Asciano CEO and Rivet Group executive chairman wanted Dalgaranga, a million-ounce deposit near Mount Magnet, Western Australia's oldest gold-mining town.

Over lunch at Cecconi's Flinders Lane, Rowsthorn discussed his plans with two executives from Anglo-South African investment bank Investec, which had been hired to market the mine. Rowsthorn had offered $65 million for Gascoyne Resources, which owned the mine and had been placed in administration the previous June. The bankers, Stefan Edelman and Anthony Hawke, Rowsthorn would claim, said they wanted $150 million.


Italian restaurant Cecconi's Flinders Lane, where Mark Rowsthorn discussed his plans with two executives from Anglo-South African investment bank Investec.

In the months following the inconclusive lunch, Rowsthorn and his business partners – the world's biggest asset manager and an obscure Sydney financier – executed an audacious plan to get Gascoyne: for an upfront cost of $308,476.50.

The men secured control of a slice of Gascoyne debt, hired a top commercial barrister and tried to convince a judge to liquidate the business.
They failed. But the struggle over the Dalgaranga gold mine demonstrates how the federal legal system, often notoriously slow at resolving commercial disputes, can move remarkably quickly when a judge recognises that the capital markets won't wait for justice.

Like many prospects, Dalgaranga delivered less than promised.
In late 2018 and early 2019, Gascoyne raised $40 million to finish building the mine, which started production in May 2018. The company predicted it would produce more than 100,000 ounces of gold over six years.
As results of the digging arrived last May, Gascoyne's geologists realised they had made a huge mistake. There wasn't as much gold under the reddish dirt as their geological models had predicted

With the gold price under $US1300 an ounce, Gascoyne wasn't generating enough cash to pay back $87 million owed to National Australia Bank and the Commonwealth Bank of Australia, or $37 million owed to NRW, a big Perth mining contractor.
On June 2 last year, Gascoyne was placed in voluntary administrationunder the control of three executives from FTI Consulting, a corporate advice firm. Led by Michael Ryan, they began to work through two options: sell the mine, or ask investors to give it another shot.


Enter Rowsthorn

Rowsthorn knew how quickly a successful-looking business could fail.
He became chief executive of port operator Asciano when it was spun out of Toll in 2007. Not long after, the financial crisis forced Asciano into an emergency capital raising.


Mark Rowsthorn in 2014 at a shareholder meeting of McAleese, which was folded into Adaman, which tried to buy Gascoyne Resources. Patrick Scala

Rowsthorn then took over trucking group McAleese, floated the company in 2013, and placed it in administration three years later. In 2017 he folded what was left of McAleese, which had been renamed Rivet Mining Services, into a private mining investment group, Adaman Resources, and became the largest shareholder.

Dalgaranga looked like a good opportunity. Even though there wasn't as much gold in the ground as originally thought, there was enough. Eight years of weak gold prices were morphing into a rally driven by low interest rates.
Adaman owned the Kirkalocka gold processing plant about 120km away, and reckoned it could save a lot of money combining the operations.
Adaman Resources asked Investec, which FTI had hired to market the business, for access to Gascoyne's accounts, legal files and geological data. Last September, Adaman was given access to a database with the Gascoyne information.

Seven weeks later, five Adaman executives, including its head geologist and mine planning engineer, were taken on a tour of the mine site.
Adaman missed the November 22 deadline to lodge a bid. Investec gave it the weekend. The following Monday, Adaman offered $42 million for Gascoyne, a price Investec had already said was too low.

Recovery plan

Meanwhile, business was looking up at Dalgaranga. The FTI administrators had decided to spend some $10 million speeding up the removal of earth from a wall in the mine's main pit. For two months, 12 hours a day, miners blasted and used excavators to move dirt blocking the gold seam.

The expensive punt worked. For five months in a row, more than 6000 ounces emerged from the mine, where it was smelted into bars and flown to Perth from the mine's airstrip. It wasn't as much as the 9000 ounces forecast a year earlier, but was better than 2019's 5139 monthly average.

With the support of NAB, the Commonwealth Bank and NRW, the administrators decided that Gascoyne could return to life as a listed company.
On June 18, FTI asked the company's creditors to approve a deed of company arrangement that it said could lead to a full refund for everyone owed money.

Investors, corralled by stockbroker Cannacord Genuity, would contribute $70 million to $80 million to pay out the two commercial banks. They would be replaced by a loan from Investec. NRW would get shares and 5 per cent of the cash raised in the share sale.

Gascoyne's bank debt would go from $80 million to $40 million. It would have $30 million available in cash. About 400 employees and contractors would keep their jobs, including $616,000 worth of leave, and the state and federal governments would continue to receive taxes from the production of 70,000 to 80,000 ounces of gold a year.

FTI scheduled a conference call for Thursday, June 25, at noon, Perth time, for creditors to vote on the recapitalisation plan.
The evening before, around 5.30pm, the managing partner of FTI's insolvency division, John Park, got a call from one of Rowsthorn's fellow Adaman directors, Simon Raftery.

A company controlled by Simon Raftery purchased a $616,953 debt owed by Gascoyne, which turned him into a creditor and gave him the right to ask the court to bankrupt Gascoyne.

In 2013 Raftery, a specialist in distressed debt, had founded a Sydney investment fund, Remagen Capital Partners, to specialise in mines, mining contractors and mining-equipment rental.
One of his investments was Adaman.

After Rowsthorn's approaches to Investec had been rebuffed, the Adaman board decided that Raftery would take over the negotiations, according to one of the principals.
On the June 24 call, Raftery dropped a bombshell. He told Park he planned to propose a rival plan to creditors the following day. With the support of investment giant BlackRock, they would offer $85 million to pay out the banks, surplus staff and anyone owed less than $10,000.

The following day, Gascoyne's creditors refused to postpone the vote, to consider the Rowsthorn and Raftery plan, by about 10 to one, based on the value of their debts. They then overwhelmingly supported the FTI recapitalisation plan.
The FTI administrators began work to refloat the company on the share market. Gascoyne predicted the mine would produce 400,000 ounces of gold at an average cost of $1450 over the next seven years. With this amount of gold, a Canaccord analyst, Henry Renshaw, estimated the gold mine was worth $292 million and the company $263 million.
The original shareholders would emerge with 20 per cent of the company, or more if they wanted to invest again

"It is not often that a voluntary administration results in such a significant turnaround, and an estimated full recovery for creditors, let alone value for shareholders," George Bauk, the proposed chairman and rare earths-mining veteran, wrote to investors on July 6.
A meeting was scheduled to approve the deal on August 5 at Perth's Celtic Club, a two-storey Federation-style building popular for weddings.

The day before, a Tuesday, Raftery sprung a trap.

Adaman's lawyers at Arnold Bloch Leibler filed an urgent lawsuit in the Federal Court. It accused FTI of a conflict of interest, asked for the recapitalisation to be cancelled and for Gascoyne to be placed in liquidation.
To prosecute the case, Arnold Bloch Leibler hired a top commercial barrister, Bret Walker, SC.

On the same day, a company controlled by Raftery purchased a $616,953 debt owed by Gascoyne.
The debt, which was bought for $308,476, turned him into a creditor, which gave him the right to ask the court to bankrupt Gascoyne.

Raftery would later acknowledge, in court, the lawsuit was designed to drive Gascoyne under so they could buy its assets. But another source on his side said the liquidation attempt was a corporate tactic which it never intended to go through with.


The judge

The day after the lawsuit was filed, some 25 investors, advisers and executives gathered at the Celtic Club.
Others dialled in. About 65 per cent of shareholders were represented.
Ninety-nine per cent voted in favour of the FTI plan.

Raising $85 million while subject to a serious legal threat would be difficult, and Cannacord pushed back the share sale.
The mine's fate was now in the hands of a slow and unpredictable court system.
The case was assigned to Jonathan Beach, an experienced judge who was in the running for the High Court.
Beach appreciated that any delay could sabotage the deal, which had been painstakingly put together over 14 months

Though most of the hearings were conducted over video because Melbourne was locked down, Beach ruled 56 days after the case began.
Many commercial cases take years.

The complaint by Raftery and Rowsthorn's lawyers essentially argued that FTI and Investec had unlawfully frozen them out.
Raftery told the court that FTI, other than a one-off discussion in March, refused to engage with his side. Rowsthorn asserted that FTI's bankers sought a king's ransom for the mine over lunch at Cecconi's.


For five months in a row, more than 6000 ounces emerged from the Dalgaranga mine. It wasn't as much as the 9000 ounces forecast a year earlier, but was better than 2019's 5139 monthly average.

“Mr Brown of Investec told us that Investec and the administrators were not interested in a sale proposal unless the sale price was in the order of approximately $150 million,” Rowsthorn told the court.

The reference to Mr Brown was a mistake. Rowsthorn meant Anthony Hawke, the Investec banker. Hawke's boss, Stefan Edelman, told the court he had no memory of $150 million being raised.

Raftery and Rowsthorn's lawyers alleged the paperwork used to convince shareholders to vote for FTI's recapitalisation plan was misleading and that FTI managers should not be allowed to run Gascoyne because of work they did for the company before it was placed in administration.

Power move

The trial ran six days. Gascoyne was represented by a Perth barrister, Brahma Dharmananda, SC. On the fifth day of the trial, September 17, Raftery and Rowsthorn made another surprise move: they offered to buy Gascoyne for $140 million.
The deal would pay out every creditor and make a significant contribution to the shareholders, their lawyers said.

Beach issued his judgment on September 29. The judge wasn't convinced Rowsthorn and Raftery had $140 million available to buy Gascoyne, that FTI or Investec hadn't treated them as serious bidders, or that Investec had asked for $150 million over lunch.

Moreover, Beach was unequivocal about which offer he believed would be best for those owed money.

"Habrok [Rowsthorn and Raftery's bidding vehicle] has gone nowhere close to demonstrating that there is a real prospect of obtaining a better return for creditors by pursuing such investigations and proceedings in a liquidation as compared to the obvious and considerable advantages to the creditors," Beach wrote.

"It is problematic to say the least as to whether I have the power to vary the DOCA [deed of company arrangement] in the terms contemplated without having relevant meetings of creditors. But even if I did, I would not so exercise it."

(Raftery declined to comment. The Australian Financial Review does not intend to accuse him or Rowsthorn of engaging in wrongdoing or unethical behaviour.)

Beach ordered the losing side to cover Gascoyne's legal costs.

The mining company was readmitted to the Australian Securities Exchange on October 21. The shares last traded at 44¢, valuing the mine around $110 million.

cheers