Wiluna gold mine back in administration just only weeks after raising $60m
The Wiluna gold mine has been owned by companies run by Joseph Gutnick (twice), Owen Hegarty, and a host of other big names in gold – but it’s back in administration again.
The troubled West Australian gold mine once run by Joseph Gutnick and Owen Hegarty’s Oxiana has claimed another corporate victim, only weeks after shareholders injected cash into the company.
Wiluna Mining directors called in FTI Consulting as voluntary administrators on Thursday, only weeks after closing an emergency $60m capital raising aimed at keeping the company afloat amid rising costs and an industry skills crisis that has made it difficult for smaller miners to compete for staff.
Wiluna has proved too difficult for a host of the biggest names in Australian gold mining and the problems have been exacerbated by rising costs over the past year.
Wiluna Mining, then known as Blackham Resources, bought Wiluna from the ashes of Ed Eshuy’s Apex Minerals, which collapsed in 2013 amid a gold price slump – although the mine had struggled to make money at the $US1800-an-ounce gold price peak in 2011.
The mine had been owned by a host of the biggest names in the industry, including Mr Gutnick’s Great Central Mines, Normandy Mining, Newmont Australia, Agincourt Resources and Mr Hegarty’s Oxiana. Mr Gutnick was also the chairman of Blackham in 2014 when the company closed a $4.6m deal to buy the mothballed mine from the Apex liquidators.
Like many of its predecessors, Wiluna Mining foundered on its inability to make cash from the mine’s difficult-to-process refractory ore, and was selling gold in concentrate form to Russian smelters until March, when Russia’s invasion of Ukraine created a fresh hurdle for its plans.
While administrators FTI said on Thursday they planned to continue to run Wiluna as a going concern as they assessed the mine’s viability, they are likely to face pressure to explain the state of company’s books at the first creditors meeting in early August, given Wiluna raised $63m in capital at 40c a share in mid-July.
About $16.8m of that came from contractors and other creditors swapping debt for equity, a move that will have put Wiluna’s underground contractor, Byrnecut, about $13.4m out of pocket on its outstanding trade credit if Apex is not able to trade out of its current difficulties.
Wiluna is estimated to have raised more than $400m over the eight years it has owned the troubled mine and processing plant, with Apex Minerals estimated to have raised a similar amount in its time in charge of the operation.
Wiluna parted ways with long-serving executive chairman Milan Jerkovic two weeks ago as part of a planned reset of its operations and strategy under new management, but incoming chairman Rowan Johnston called in FTI’s Michael Ryan, Kathryn Warwick, Daniel Woodhouse and Ian Francis as voluntary administrators this week.
FTI said in a statement on Thursday the company had did not have enough cash left to put in place a new mine plan and strategy, attributing its problems to “increasing cost pressures, tightening terms of creditor payments, the impact of Covid-19 on staff availability, project ramp-up issues and worldwide shipping constraints”.
“Although Wiluna Mining has investigated options to address that cash flow shortfall, through obtaining financial accommodation from creditors and shareholders, it has become apparent that those options will not successfully address the cash flow shortfall in the time available,” FTI said, adding that it planned to keep Wiluna operating, with Byrnecut understood to have confirmed their support for the mine’s operations.
Wiluna shares last traded at 20.5c before the company called in administrators.
Wiluna’s collapse came as gold major Evolution Mining unveiled its June quarter production report, with the company also pointing to rising costs and the effect of Covid-19 absenteeism at its operations.
Evolution had already braced investors for a downgrade in June. The company said on Thursday its mines had produced 640,275 ounces of gold for the full year, at an average all-in-sustaining cost of $1259 an ounce.
Its June quarter production was up 16 per cent to 172,722 ounces, at an AISC of $1290 an ounce.
Evolution flagged a 12 per cent output lift for the current financial year, saying it expected its mines to produce 720,000 ounces for the full year, and then 800,000 ounces in the following fiscal year. Evolution shares closed up 3c to $2.34.
More Coverage
