Monarch Gold Mining’s largest shareholder, Territory Resources, will determine the fate of the embattled gold producer by tonight when decides whether to accept Monarch's eleventh-hour debt repayment proposal.
Monarch chairman and managing director Michael Kiernan told AAP he had put a proposal to the Territory Resources, an iron ore miner, to repay all of about $18 million in loans over 12 months.
Newly appointed Territory Resources chairman Andrew Simpson told AAP he had not yet seen the proposal and would not comment until he had done so.
Mr Kiernan resigned from his role as Territory chairman last week when the board refused to provide another $4 million loan facility to prop up the cash-strapped Monarch.
Mr Kiernan said administration was “a significant threat” for Monarch, which was recently forced to close its loss-making Davyhurst gold mine in WA.
He said the proposal was fair and went “above and beyond”, and involved the Kiernan family stumping up half of Monarch's $30 million rescue package and underwriting an equity raising for the other half.
The proposal also includes providing Territory with the Davyhurst mine - which has a book value of $45 million - as security to cover the loan, he said, because the current security only covers up to $5 million.
“They've responded with conditions that were difficult, they wished to have time today, and we have agreed that the Monarch board will review the situation at close of business today,” Mr Kiernan said.
“Our destiny is not in Monarch's hands - it is in Territory's court.
He said Territory's conditions were hard for Monarch to accept."Both sides agree it is a very fair proposal... yet the fine print (of Territory's conditions) makes it very difficult.
“If no agreement is reached between Territory and Monarch, everybody loses - staff, contractors, shareholders.
“One would hope the commercial sense of Monarch's proposal prevails and we'll be able to proceed with it, whereby Territory is returned all its funding, it is secured, Monarch continues and the shareholders of Monarch don't have their investment put in jeopardy.”
Mr Kiernan said Territory's 19.9 per cent stake in Monarch would reduce after the capital raising to about 10 per cent.
“Territory hold about 40 million shares in Monarch, which I would break up and place overseas.”
He dismissed reports that he would sell down his personal stake in Territory, believed to be worth about $18 million, as speculation.
“Obviously, to fund Monarch, I would have to liquidate certain assets.
“As a family, we're discussing which assets we’d liquidate.
“For the Kiernan family to come up with $15 million, I've had to hock the family jewels.”
He confirmed reports that Monarch had struck a deal to sell its Minjar gold project in WA to Fred Swaab's Aard Metals and Energy, which is expected to list on the Australian stock exchange by August, but the sale had been delayed due to Monarch's pressing financial woes.
“It (the Minjar sale) is now embroiled in some difficulties which were completely unnecessary, with men being men,” Mr Kiernan said.
“But it is now a level playing field and they are wishing to proceed.
“Presuming Monarch's proposal is accepted by Territory, the gold miner will proceed with its purchase of the Mt Magnet operations in WA from South Africa's Harmony Gold, having secured a last-minute extension to the acquisition deadline.
“Harmony and Monarch have concluded discussions and ultimately will make an announcement.
“The documentation to consummate that was completed yesterday.”
Monarch is pinning its hopes on its Mt Ida gold development, which Mr Kiernan said would be “a very prolific and profitable producer, and will carry Monarch forward on its own”.
Territory Resources was being sought for comment.
Shares in Territory were up one cent at 86 cents at 12.09pm.
Monarch's shares remain in a trading halt but were last priced at 29.5 cents.
MON Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
