China Hanking continues gold quest

But the gold price has risen from about $US1300 an ounce at the time of its collapse to more than $US1750 an ounce. Picture:Rob Leeson

Hong Kong-listed China Hanking Holdings is back in the hunt for West Australian gold assets, launching a last-minute play to take a cornerstone stake in failed gold developer Gascoyne Resources.

Gascoyne collapsed into administration a year ago, calling in FTI Consulting as voluntary administrators only weeks after launching an emergency $20.6m capital raising designed to ease its woes after failing to deliver on promises about the quality of its gold mine.

But the gold price has risen from about $US1300 an ounce at the time of its collapse to more than $US1750 an ounce, and FTI last week launched plans to refloat the company on the ASX, talking up a $70m-$80m raising to recapitalise the company and repay its remaining smaller creditors the $6m they are owed, albeit in cash and shares and over the next three to five years.

But it is understood Hanking — through advisers Argonaut Securities — launched a last-minute bid to disrupt FTI’s proposed deed of company arrangement, throwing an extra $20m on the table to take a cornerstone stake in the raising and offering to repay creditors early and in cash, even before winning Foreign Investment Review Board approval.

Under the proposal, Hanking would emerge with 20-30 per cent of Gascoyne, with smaller unsecured creditors paid out immediately and an accelerated $10m cash payment to major creditor NRW Holdings as well.

Gascoyne is now producing gold at a steady rate of about 72,000 ounces a year, and was spitting out enough cash for the administrators to pump $10m into a pit wall cutback at its Dalgaranga mine in October last year, and spend another $4.5m on infrastructure and improvement.

Hanking is believed to have been looking to do a deal over Gascoyne since the failure of its bid to win Focus Minerals’ Coolgardie gold assets. There, too, Hanking launched a late bid to wrest the assets away from a previously agreed deal between Focus and Horizon Minerals.

Additional reporting: Nick Evans