The only surprise in the collapse of Brisbane-based copper miner CuDeco was that it took so long to happen

The demise of Brisbane-based copper miner CuDeco - once valued at $1 billion - has come as no surprise to anyone who has followed the company’s travails. Here’s how it unravelled.

The demise of a Brisbane-based copper miner CuDeco once valued at $1 billion has come as no surprise to anyone who has followed the company’s travails.

ON THE ROPES

The only surprise in the collapse of Brisbane-based copper miner CuDeco was that it took so long to happen.

After all, this mob, once briefly valued at $1 billion, had been on the ropes for years.

With accumulated losses in the hundreds of millions of dollars, a perpetually revolving door of senior executives and a chronic inability to source long-term financing, it really did seem only a matter of time before it failed. A when, not if, proposition.

Indeed, the signs were everywhere. CuDeco’s flagship Rocklands Copper Mine, which opened with great fanfare near Cloncurry in late 2016, suffered several brief closures the following year before grinding to an indefinite halt in August 2018.

Conveyor at CuDeco Rocklands copper processing plant. Picture: Supplied

It remains in mothballs today and all non-essential staff, which once included more than 300 workers and contractors, were stood down pending an elusive restart of operations.

In case this wasn’t bad enough, the company’s shares were suspended from trading in March last year because it still had not finalised half and full-year accounts dating back to 2017.

Then-chairman Peter Hutchison acknowledged late last year that the delays stemmed from CuDeco’s inability to convince external auditors that the firm “is able to continue as a going concern’’.

At one point, things were so grim that the company was actually sourcing short-term loans from its Chinese directors and other Asian backers to repay other borrowings. That’s never a good look.

LOTS OF BRAVADO

It wasn’t always this way for CuDeco, which was founded by “colourful’’ mining industry player Wayne McCrae.

Originally known as Australian Mining Investments, it launched in 1960 and floated on the ASX in 1971. The name change came in 2006 and the shares hit a high above $10.

McCrae, a gritty bloke who once narrowly survived a helicopter crash outside Mt Isa in 1992, made a name for himself by spinning terrific yarns and talking up the huge potential for Queensland’s copper industry.

With unabashed bravado, he once boasted that CuDeco would grow to become the world’s biggest copper miner.

CuDeco founder Wayne McCrae.

Later, in a legendary quip, he even told a mining conference that the company’s copper deposits were so rich, and had such a great drilling outlook, that he felt like “a dog with two dicks’’.

But the yawning gap between rhetoric and reality proved too much for Chinese stakeholders, who chafed at the slow pace of work at the Rocklands site and ousted McCrae as chairman and chief executive in 2015.

Alarmed by the company’s growing losses, they vowed to nail down longer-term funding arrangements and get the mine up and running.

They talked a good game and made all the right noises about the company, which relocated its headquarters from the Gold Coast to Brisbane in 2016.

Pointing to a rebound in commodity prices, directors vowed as late as last November that they were “confident the (Rocklands) project will move forward in a profitable, fully funded and sustainable manner’’.

But it never happened, much to the chagrin of frustrated investors, whose suspended shares have sat frozen at just 23.5 cents for more than a year.

SO WHAT NOW

So what happens now?

FTI Consulting operatives Kelly-Anne Trenfield, Ian Francis and Michael Ryan have been appointed receivers and managers over CuDeco by cornerstone investor China Tonghai International Financial Limited following a review of funding and restructuring options.

The trio have secured funding from a group of lenders, including CTIFL, to complete a technical and financial review of the Rocklands project.

Conveyor at CuDeco Rocklands copper processing plant. Picture: Supplied

Options include a recapitalisation as part of a complete revamp of the company or a sale of the assets.

It’s likely the decision will pivot largely on the price of copper, which has fluctuated over the past year and was pegged at about $8500 per tonne yesterday.

That’s about a third higher than when the ill-fated production at Rocklands kicked off.