State government converts $10m loan to Group 6 Metals to equity for its Dolphin Tungsten Mine on King Island
The state government is converting its $10m loan to a business running a Tasmanian mine into equity. Here’s why.
Tasmania
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The state government now has a $10m stake in an embattled tungsten mine on King Island.
It had initially given a loan for the same amount to G6M, owners of the Dolphin Tungsten Mine.
However, the state government has reached an agreement with G6M, under which the $10 million will be converted to equity.
Last year, the Dolphin Tungsten Mine and G6M’s survival was in doubt as they struggled to become profitable.
The company agreed to a significant recapitalisation plan with secured lenders and creditors in December.
The following month, the board of G6M had a major shake-out, with Tasmanian business magnate Dale Elphinstone among those joining the company.
The King Island mine supports 95 direct jobs.
Business, Industry and Resources Minister Eric Abetz said the government “had taken decisive action” to secure the long-term future of the mine.
“The Dolphin Tungsten Mine is a major employer on King Island and a key contributor to the local economy,” Mr Abetz said.
“To give the mine the best chance of success, the government is converting its existing $10 million loan into an equity stake in Group 6 Metals as part of a broader turnaround plan developed by the company and its senior lenders.”
Mr Abetz said the government’s decision would strengthen the G6M’s financial position and allow for critical improvements to the mine’s operations.
“Our support ensures the mine has the opportunity to succeed and continue creating jobs and economic activity for King Island.
“This is intended to be a short to medium-term investment to help stabilise the mine through challenging global conditions.
“The Tasmanian government remains committed to working closely with the company to support the mine’s ongoing operations and ensure its long-term viability.”
The agreement is subject to regulatory and shareholder approvals.
Originally published as State government converts $10m loan to Group 6 Metals to equity for its Dolphin Tungsten Mine on King Island
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