'Gut feel' contractors won't be paid: mine administrator
THE administrator of Goondicum ilmenite mine has told a creditors meeting that his "gut feel" was that unsecured creditors, such as local contractors and small businesses, wouldn't see a cent from the company, which was losing $1.5 million per month.
One well-known Monto business revealed to the Times the mine owed them $362,000.
"What now?" a clearly shell-shocked North Burnett mayor Rachel Chambers told the Times after the meeting's conclusion.
"The community is too raw to work out what comes next."
This mine has had a long and troubled history since commencing operations in 2007.
A creditors meeting was held today in Monto Shire Hall, attended by around 40 people.
Administrator Bryan Hughes told the meeting that the "silver lining... is that we have a strong sense that there is a viable project still here at Goondicum."
"We just have to fix (the) problems with repackaging and putting it out there (on the market) again," Mr Hughes said.
"If we can try and get this project back up and running and viable again, that's certainly in (this room's) best interests."
Goondicum mine owes around $900,000 to its employees, USD $27 million to its secured creditors, Pala Investments and Hainan Wensheng, and around $5 million to unsecured creditors.
The Times understands more than half of the $5 million is owed to Dalby's RSA Contractors, who mined the ore at Goondicum.
"What we've said to creditors is that any return is at least six months down the track and you are better off banking on no return and managing to that circumstance," Mr Hughes said.
"I'd rather manage your expectations right down (as) unsecured creditors, and if we can improve on that, then that's a win.
"My expectations are not great that there's going to be anything left.
"Right now, I would be surprised if the value of the project is greater than USD $27 million.
"That's just my gut feel from 30 years of doing this.
"It's a difficult set of circumstances.
"I hope I'm wrong."
Mr Hughes said Goondicum had around $700,000 in the bank and inventory worth around $3.4 million, although only around $2.7 million would be left after subtracting transport and shipping costs for the mine's remaining ilmenite and apatite.
This amount will be bolstered by the sale of a shipment of ilmenite already at Gladstone Port.
According to Mr Hughes, a company associated with secured creditor Wensheng had placed a 50 per cent pre-payment on this shipment, totalling between USD $1.4 - $1.7 million, but because it was not Wensheng directly, his view was they were "probably" an unsecured creditor.
This is in addition to the $5 million owed to other unsecured creditors.
Mr Hughes was more positive about employee wages and entitlements being paid.
"It's our expectation you will get paid in full," he said.
The mine's former employees are due to receive their final pay packets tomorrow.
Meanwhile, redundancy pay and annual and long service entitlements would need to wait until the administrators sold Goondicum's inventory.
Mr Hughes said this would be "probably at least a month away".
He described the voluntary administration process as "cauterising the wound" in light of the fact the mine was losing around $1.5 million per month.
A technical review is under way as to why the ramp-up of the mine's production has been so lacklustre.
So far, it has revealed that the ore which was being processed at Goondicum has a 20 per cent higher presence of 'slimes', a mining term for very fine waste particles, than the plant was designed to process.
"That additional 20 per cent of slimes led to a whole lot of blockages," Mr Hughes said.
Mr Hughes said the technical review would take 3 - 4 months "at minimum", and then another 2 - 5 months crunching the data so they can put the mine back up for sale.
"This process ordinarily leads to some form of transition of ownership," Mr Hughes said.
He believed at the end of the voluntary administration process, in around three weeks time, the company would enter into a deed of company arrangement, a " binding arrangement between a company and its creditors governing how the company's affairs will be dealt with," according to the Australian Securities and Investments Commission.
A committee of inspection, a consultative committee of creditors which Pitcher Partners can consult "if we so choose", according to Mr Hughes, was formed by Monto Tyre Centre's Brett Avis, DJ's Steel and Concrete's Damien Zieth and Monto Irrigation and Plumbing's John Titmarsh, as well as representatives from Pala Investments and RSA Contractors.
Another creditors meeting will be held in Monto on October 14.