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https://thewest.com.au/business/min...ialisation-and-repay-creditors-ng-b881581799z

Plan to return collapsed Gascoyne Resources to ASX through recaptialisation and repay creditors

Stuart McKinnonThe West Australian
Thursday, 18 June 2020 10:37AM
Stuart McKinnon


Dalgaranga last month produced more than 6000oz of gold for the fifth consecutive month. Credit: NRW Holdings



An operational turnaround and a surging gold price could see failed miner Gascoyne Resources rejoin the ASX with unsecured creditors potentially receiving all they are owed.

Administrators for the collapsed miner, FTI Consulting, this morning recommended that unsecured creditors approve a Deed of Company Arrangement as part of a broader recapitalisation and relisting plan.

The recapitalisation plan would involve a placement and rights issue to raise between $70 million and $80m.

FTI said the company’s secured bank creditors had agreed to an arrangement in which the debt owed by Gascoyne would be repaid in full, partly from the equity raising and partly through refinancing.

Meanwhile, secured creditor and mining contractor NRW Holdings has agreed to upfront and installed payments as well as a debt to equity conversion amounting to the $32.7m it is owed.

FTI said its recommendation followed significant operational turnaround at Gascoyne’s flagship Dalgaranga mine near Mt Magnet, which had been achieved over the past 12 months.


Gascoyne Resources’ first gold at Dalgaranga.

Dalgaranga last month produced more than 6000oz of gold for the fifth consecutive month, which FTI said reflected higher grades accessed from the Gilbey’s main zone at the mine.

That followed FTI’s decision to reinvest about $10m in cashflow into an accelerated cutback of the Western Wall of the main Gilbey’s pit in October last year.

FTI said the move had been the most important operational restructuring initiative implemented, designed to de-risk the mine’s future access to sustainable quantities of ore at Gilbey’s.

It said ore from Gilbey’s would keep the processing plant running at maximum capacity while an additional $4.5m had been reinvested into long-term infrastructure and other improvements.

The turnaround has also been aided by a surging gold price and an unfavourable hedging arrangement being closed out when the company collapsed, allowing Gascoyne to take advantage of a higher Australian dollar price for the precious metal.

FTI said the proposed DOCA and associated recapitalisation and relisting plan were being formulated with the objective of Gascoyne continuing to operate under its existing group structure.
“The DOCA is intended to allow all unsecured creditors to receive up to 100 cents in the dollar in respect of their pre-appointment claims,” it said.


The plan will be put to creditors at a meeting on Thursday, June 25.
Subject to approval, a meeting of shareholders will be scheduled to approve aspects of the recapitalisation.

Shareholders will be heavily diluted in the recapitalisation but also have the chance to subscribe for more shares as part of the rights issue.

Details of the raising are yet to be ironed out.

Gascoyne collapsed in June last year, citing a material cashflow shortage because of continued production difficulties at Dalgaranga.

The appointment of FTI as administrators came shortly after the company raised $24.5m from shareholders.
Dalgaranga entered production just 13 months earlier but struggled to turn out the expected quantity of gold because of what Gascoyne referred to as “poor reconciliation of geological models”.