NRW Holdings will remain as Gascoyne Resources’ mining contractor at the Dalgaranga gold project in Western Australia irrespective of the latter’s voluntary administration.
The contract agreement is estimated to be worth $324 million, with a term of six years (starting from late 2017).
NRW will continue providing drill and blast mining services to Gascoyne on a ‘business as usual basis’, while the troubled company explores its recapitalisation options with FTI Consulting.
The contractor has been known to support Gascoyne through financial setbacks by sub-underwriting up to $5.3 million of the company’s entitlements issue in April.
NRW also provided Gascoyne with a $12 million loan in December last year, which repayment was later extended by six months (due June 2020).
Despite having obtained financial support from creditors and shareholders, Gascoyne could not resolve its cash flow shortfall. The level of gold ounces produced at its core project Dalgaranga could not meet expectations.
Prior to the administrators’ call into Gascoyne, NRW was expecting earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2019 financial year in the range of $140–$145 million.
NRW’s order book now includes $1.1 billion of work secured for the 2020 financial year, excluding any contribution from Gascoyne.
The mining contractor is also reportedly supporting FTI Consulting during the review process and will be paid for the works it undertakes.
“Whilst we are clearly disappointed with the recent events at Gascoyne, we remain positive on the outlook for NRW,” managing director and chief executive Jules Pemberton said.
“In addition, with key resources, both workforce and equipment, currently in high demand we remain confident that our personnel and equipment at Gascoyne’s Dalgaranga project can be easily redeployed in the event a recapitalisation is unsuccessful.”