The Avebury Nickel Mine's cash-strapped owner is in urgent talks...

The Avebury Nickel Mine's cash-strapped owner is in urgent talks trying to secure its future after shareholders rejected a deal that would have led to a big injection of funds.

Voluntary administration is a possibility, and the future of the West Coast mine and its 220-odd workers is now unclear, despite improved recent performance. Mine owner Mallee Resources Limited ended the June quarter with just $600,000 in cash, plus a $2.8 million receivable from concentrate sales and an $8.7 million receivable for sale of assets in Myanmar.It owed big shareholder and offtake partner Hartree $45.7 million at the end of the quarter and had drawn $8.7 million on equipment financing facilities.
Shareholders on July 27 rejected a deal recommended by the Mallee board that would have given Hartree warrants allowing it to increase its stake in Mallee to more than 50 per cent and gain effective control of the company.The deal was expected to lead to a big funding injection from Hartree which would have taken Mallee through its current cash squeeze.Some of the shareholder opposition was based on the belief the deal would water down the value of their holdings and allow Hartree to take control of a company many of them want re-listed on the ASX. After the vote was tallied, Mallee said it would "immediately engage with its advisors and Hartree Partners to determine next steps".Mine closure would be a big blow to the West Coast and state economies.Mallee restarted mining at Avebury last year, after a long period of care and maintenance .State Resources Minister Felix Ellis on July 26 said: "Our government is a strong supporter of the Avebury mine and we recognise the positive impact its reopening has made to date to both the West Coast region and the Tasmanian economy.""We are engaging with the company on support to keep them moving forward."Comment has been sought from Mr Ellis in the wake of the shareholder vote.Labor Deputy Leader Anita Dow urged the government to step up and ensure the mine remained open."A potential closure of the mine would be devastating for the community, the workers and would have a huge economic impact for our region." Ms Dow said."The last thing our region needs, and especially the West Coast, is for this mine to shut, especially with many Tasmanians facing the cost of living crisis."The government could assist the mine by releasing the Aurora Energy cash bond that was put in place, which would free up much-needed capital for the business, but, as usual, they have failed to act to support workers and the industry."Minister Ellis is proving that he is inept as a representative for Braddon, and this is a further example that he is out of his depth as a Minister."

Premier Jeremy Rockliff said the government was working through things with Mallee and more than willing to help where possible."We have been in discussions with Mallee about financial support to secure the mine's production," Mr Rockliff said.Mallee on July 26 reported June had been the company's best month since the start of commissioning at Avebury."The positive operating performance has continued thus far in July, which is already a record month for metal produced." its June quarter report said.Tonnes mined in the June quarter increased by 27 per cent compared with the March quarter, but the ore grade was lower than expected.Mallee said the mine reached its nameplate mining rate of 75,000 ore tonnes per month in June, for the first time in the mine's history.

Avebury produced more nickel concentrate in June than in April and May combined.The company tallied $22.7 million in cash receipts for sale of nickel-cobalt concentrates during the quarter, while all-in sustaining costs fell slightly to $30.9 million."The June quarter presented challenges in our commissioning of Avebury, but it finished on a high note with good operational performance in the month of June," managing director John Lamb said."We are now close to nameplate production levels in the mine and processing plant and, once achieved and stabilised, we will seek to pursue the many growth opportunities that Avebury will afford us."On July 28, he said he had told the site team there was no need to panic and the situation was not a judgement on the Avebury operation, which was performing "exceptionally well".Australian Workers' Union assistant state secretary Rob Flanagan urged management and shareholders to quickly find a solution that ensured the mine's ongoing operation.

"There was an expectation among the workforce that the shareholders would accept the proposal that was put to them," Mr Flanagan said."Clearly, that's not the case."You would expect the priority for everybody is that there is a solution so there is some certainty for people, given the difficult period that the operation's been through."