Territory cuts off cash to Monarch Kate Hayc#ckMonday, 30 June...

Territory cuts off cash to Monarch

Kate Hayc#ck
Monday, 30 June 2008

AFTER its board shake-up and the departure of Michael Kiernan, Territory Resources has moved to reassure shareholders that the Frances Creek operation is still making money. However, the company will “review” its holding in Kiernan’s Monarch Gold and no further funds will be made available to help the struggling miner.
Michael Kiernan


Monarch's Davyhurst mill

Territory said today that while it would not provide a detailed financial assessment before it needed to submit its next quarterly report, the company did tell shareholders Frances Creek was “profitable and cash positive”.

The company has also said it would not make any further provision to give funds to struggling gold miner Monarch, either as debt or equity.

Territory owns an 19% stake in Monarch, taken under Kiernan’s leadership to help bolster the gold miner as its Davyhurst operations in the Goldfields failed to ramp up to profitable levels.

Monarch will also need to repay Territory’s loans under an “acceptable loan plan”.

Monarch Gold chairman Kiernan resigned from Territory’s board last week, saying he needed to focus on the ailing gold miner.

However, Kiernan also came into conflict with Territory’s board over the money being pumped into Monarch, with Territory appointing an independent financial adviser to review its investment in the company.

This afternoon, Kiernan told Dow Jones Newswires his company could fall into receivership as a result of losing its funding lifeline from Territory.

Territory also said today it retains sufficient cash reserves and funding to continue normal operations, however, it has appointed Euroz Securities to look at additional funding options for capital expenditure and exploration work at Frances Creek.

Shares in Territory rose to a high of 93.5c on the back of the announcement today before closing at 86c, a 4c gain on its closing price before it entered a trading halt last Thursday.