Gold Coast founded copper miner CuDeco collapses after numerous financial, management and safety problems

CuDeco has finally collapsed following numerous production and financial problems, management changes and the suspension of its shares for more than a year.

CuDeco opened its Rocklands processing plant to great fanfare in 2016 but the mine was beset with problems and shuttered in August last year. Picture: supplied.

GOLD Coast bred copper miner CuDeco has finally collapsed following numerous production and financial problems, management changes and the suspension of its shares for more than a year.

The company, which has been based in Brisbane since 2016, was born out of former Gold Coast mining explorer Australian Mining Investments, which changed its name in 2006 to reflect its focus on copper projects. Cu is the code for copper on the periodic table.
At its launch shareholders hoped CuDeco would reach the heights of AMI, which floated in 1971 and saw its shares soar from 30c to $10 in the space of a few months in 2006. Investors piled in following speculation about the potential of its Rocklands copper project near Cloncurry.

Colourful mining identity Wayne McCrae was pushed out of CuDeco in 2015. Picture: Tim Marsden

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The company was founded by colourful Gold Coast mining identify Wayne McCrae who once boasted that CuDeco would grow to become the world’s biggest copper miner.

However, success eluded CuDeco, which opened its Rocklands mine 10 years after its name change in 2016.

Yesterday, the company announced that key investor China Tonghai International Financial Limited had appointed three members of FTI Consulting as receivers and managers following a strategic review of funding and restructuring options.

The failure followed a long period of decline for the company, which had suspended its Rocklands mine in north Queensland indefinitely as it struggled to restructure its finances.

All non-essential employees were stood down pending the restart of operations and the company’s shares remained in a trading halt.

CuDeco’s Rocklands processing plant sent its first shipment in 2016. Picture: supplied.

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Financial statements since the half-year to December 2017 remain to be finalised.

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

“The receivers and lenders immediate priority is to explore all opportunities to maximise the value of the assets, either through the recapitalisation or restructure of the company with a view to financing the resumption of income generating activities at Rocklands or by a trade sale,’’ the company said.

Mr McCrae was turfed out of CuDeco in mid-2015 after CuDeco’s Chinese backers refused to provide a loan to keep the company afloat while Mr McCrae was at the helm.

Former CuDeco managing director Dr Dianmin Chen. Picture: Mike Batterham

He resigned on the condition that the Chinese investors guaranteed the funds to ensure the Rocklands copper processing plant reached production.

That finally happened in July, 2016, when the then-Southport based producer delivered 100 tonnes of native copper concentrate from Rocklands to the Port of Townsville.

That year it completed a $63 million rights issue and returned to ASX trading after a lengthy suspension. Shares were worth 46.5¢, a long way away from the highs of the early days, but still far above 23.5¢, the share price when suspended last year.

In 2016 CuDeco moved its head office from the Gold Coast to Brisbane.

The company was soon ordered to shut the Rocklands mine after failing a safety audit. Shares, which had risen to 75¢ in 2017, began to fall again, and managing director Dr Dianmin Chen exited the company.

Although the company managed to send a record $17 million shipment in 2017 from Townsville to China, problems continued. In March last year it suspended its shares from trading after an update showed its reserves at Rocklands were far less than thought. The mine, which once had a workforce of 300, was indefinitely shuttered in August.

Despite the problems the company managed to sound upbeat in a quarterly report released earlier this year after secured a short-term loan of $10.8 million from interest associated with a director at zero per cent interest.