More detail on Cawse, Anaconda
Centaur woes deepen - Investors turn cold on Cawse
By Sharon Kemp
WA'S laterite nickel industry was in financial dire straits yesterday after Joseph Gutnick appointed an administrator to Centaur Mining & Exploration.
Centaur is one of three developers of laterite nickel operations in WA worth $1.5 billion. With investor sentiment at its lowest ebb in five years, doubt has also emerged that Anaconda Nickel can raise the capital it needs to complete the ramp up of the Murrin Murrin laterite nickel project without the help of its major shareholder, Anglo American.
Chief executive Andrew Forrest returns to the United States this week to give potential institutional support the news that legal action was dropped that prevented Anaconda being involved in stage two of Centaur's Cawse project, near Kalgoorlie-Boulder, but with no certainty about the terms of participation.
The appointment of administrators to Centaur raises further questions about Anaconda's involvement, although the company was keen to distance itself from its fellow laterite producer's collapse yesterday.
Shares in the third laterite nickel operator, Preston Resources, have not traded for more than 18 months as the company negotiates a financial reconstruction with its bondholders following a cash crisis.
Chairman Mr Gutnick yesterday handed Centaur to KPMG administrators Stephen Hawke and Lindsay Maxsted, whose only response was to confirm their appointment and announce that urgent discussions were being held with management.
The company's collapse surprised investors, who have pushed Centaur's share price to more than double what it was a week ago on the back of talk Mr Gutnick had negotiated a rescue package possibly including Anaconda.
Stockbrokers Hartley Poynton and Merrill Lynch were the biggest net buyers of the stock.
Mr Gutnick suggested yesterday the final stumbling block for the company was an inability to renegotiate a further extension to replenish its debt service reserve account.
Centaur, which has shown signs of a cash squeeze since late last year, missed last Friday's deadline for having $US12.37 million ($24.7 million) ready to pay US bondholders.
The DSR account, used to fund interest payments on $US225 million of Centaur bonds, is required to hold a certain amount of funds at all times and was due to be replenished last Friday. The actual payment from the account is not due until June 1.
On Monday, Centaur advised the market it was still in negotiations with bondholders and was discussing the possibility of a restructure of the company's total debt position.
Mr Gutnick said yesterday he hoped the administrators could negotiate a reconstruction of the company.
"All I can say at this stage is that it became clear to directors today that the possible reconstruction was not happening quickly enough and the directors resolved to appoint Lindsay Maxsted and Stephen Hawke of KPMG as administrators of the company," he said.
"We just hope the administrators will be able to pursue further negotiations with the bondholders with a view to a possible reconstruction to the benefit all stakeholders."
But industry observers claim the continued operation of Cawse is beyond Centaur because the project's value is tied up in expanding it to achieve economies of scale.
Centaur and Preston's Bulong operation are disadvantaged because of their small size compared with Anaconda's Murrin Murrin project near Laverton.
The long period of time required to commission and ramp up the projects demands that the developing company carries a big balance sheet, which Centaur did not have.
Ironically, Cawse is the best performer of the three projects which employ pressure-acid-leach technology to mine nickel and cobalt from dry laterites.
Anaconda struck a deal with Centaur last November to earn 60 per cent of a scaled up Cawse in return for funding a bankable feasibility study, but the company faces its own financial problems.
Anaconda is understood to have encountered little support from domestic institutions in its capital raising efforts.
It is believed Anaconda has stretched its payments to creditors out to 90 days or more.
Further complicating the expansion of Cawse is Heron Resources"ability to terminate an alliance with Centaur in the event the latter becomes insolvent, although Heron's managing director Ian Bucchorn said yesterday he would wait to speak to the administrators.
Heron holds the laterite nickel reserves that will underpin Cawse stage two. |
