Financial worries of nickel laterite miners deepen
By Jane Counsel
Fears deepened yesterday about the financial health of the Australian nickel laterite industry after Anaconda Nickel's major shareholder, Anglo American, wrote off more than half the value of its investment in the company.
Anglo revealed in its accounts for the year to December that it had taken a $US82 million ($167 million) charge on its 25.4 per cent share in Anaconda, most of which it purchased for $3.15 a share in October 1999.
Anaconda's share price has since fallen to $1.35, amid fears the company might also soon be facing a cash flow crisis.
Anaconda's chief executive Mr Andrew Forrest has now flown to the US to finalise a capital raising of up to $200 million with US bondholders who are owed $US430 million by the company.
The nickel laterite miners had promised to revolutionise the nickel industry with a high-pressure, acid-leach process that enabled them to produce world competitive nickel from large laterite deposits.
But more than four years later they are all more than a year behind schedule, have suffered a blowout in capital costs, and only one mine is cash flow positive.
The collapse of Mr Joseph Gutnick's Centaur Mining & Exploration on Wednesday has re-focused attention on Anaconda and Australia's other nickel laterite miner, Preston Resources.
Centaur was placed into the hands of administrator KPMG with debts of more than $US225 million after the company failed to progress a planned recapitalisation of its finances.
Currency and gold hedging positions out of the money, along with negative monthly operating cashflows, have placed severe pressure on Centaur's cash flow, forcing the company to miss two crucial deadlines to replenish a $21 million debt reserve account used to pay US bondholders.
The bondholders have since moved to appoint their own receivers to Centaur.
Anaconda also has a $US19.6 million interest payment to its US bondholders in the June quarter.
But the company had just $128 million cash on hand at the end of the December quarter and has been burning cash at its Murrin Murrin nickel mine at a rate of around $40 million a quarter. As well, Anaconda is facing a legal suit from Central Exchange and is embroiled in legal action with Mr Gutnick, trying to regain $10.6 million it paid in a failed deal to take control of Centaur.
Preston, faring worse than Anaconda, has been suspended from the Australian Stock Exchange for 16 months. A cash flow squeeze caused Preston to default on several interest payments to US bondholders. |
