NRW remains as contractor for Daldaranga mine
NRW Holdings will stay on as Gascoyne Resources’ mining contractor at the Dalgaranga gold project in WA, even though the miner has gone into voluntary administration.
Despite having obtained financial support from creditors and shareholders, Gascoyne could not resolve its cash flow shortfall, with the level of gold ounces produced at Dalgaranga not meeting expectations.
The contract agreement is estimated to be worth $324m, with a term of six years (starting from late 2017).
NRW provides drill and blast mining services “contract mining” to Gascoyne.
NRW noted that the administrators at this stage intended to continue operating Gascoyne on a ‘business as usual’ basis while recapitalisation options are explored.
NRW is supporting business management firm FTI Consulting during the review and will be paid for all works undertaken in this period.
Prior to the announcement of FTI Consulting’s appointment, NRW was expecting EBITDA for FY19 in the range of between $140m to 145m.
In a statement to the ASX, NRW said its assessment of the current exposure to the Gascoyne contract was about $35m, representing working capital, a second ranking secured loan of $10m and equity in Garcoyne of about $4.3m.
“The resulting net cash movement in the second half of FY19 is estimated at about $8m, as most of the working capital and secured debt exposure was incurred in the first half of FY19,” company secretary Kim Hyman said.
NRW managing director and CEO Jules Pemberton said while the company was clearly disappointed with the events, it remained positive on the outlook for NRW.
“In addition with key resources, both workforce and equipment, currently in high demand, we remain confident that our personnel and equipment at the Dalgaranga project can be easily redeployed in the event a recapitalisation is unsuccessful,” he said.