Coolgardie Minerals has entered voluntary administration just months after gold production launched at its Geko project in Western Australia.
The miner will put its Geko project up for sale while exploring other debt restructuring and capital raising alternatives.
Mining issues at Geko had led to delays and significant additional costs, which were not budgeted and are unfunded, voluntary administrators Pitcher Partners said.
In September last year, Coolgardie had an offtake agreement with Northern Star Resources for 100,000 ounces of gold from Geko at $1650 per ounce. This was expected to generate $10 million in revenue.
Coolgardie managing director Bradd Granville said at the time, “This agreement is a significant milestone for the company, … locking in consistent revenue through to the second quarter of 2019.”
However, two 10,000 tonne mined stockpiles of Geko oxide ore in November and December 2018 did not meet 2.75 grams per tonne of gold minimum grade requirement of the ore sale agreement with Northern Star.
Coolgardie’s outstanding invoices with SMS Innovative Mining, totalling $9.39 million, were also extended by the latter, subject to several conditions.
The company’s listed securities were suspended from trading last month, “pending the release of an announcement regarding the sale of mined ore stockpiles, amendments to the agreement with its mining contractor and short term funding arrangements.”
Coolgardie’s joint venture (JV) partner at Geko, Bulletin Resources, will retain its royalty, profit share and JV interests in the project regardless of Coolgardie’s sale outcome.
Bulletin is considering its options in regards to the 2.5 million shares of Coolgardie it purchased in August 2018.
No further updates will be released until mid-April 2019.