Two key people involved in the revival of Woodlawn Mine have been dismissed by a board but the company says it's "business as usual."
The board of Heron Resources asked CEO and managing director Wayne Taylor to step down, "effective immediately," a September 18 announcement to the Australian Securities Exchange (ASX) stated. The Post understands the board, headed by Stephen Denniss, also dismissed Woodlawn chief operating manager Andrew Lawry, who has been involved in the project for the past five years. A third unidentified senior person has also left the company.
In mid August, Heron Resources voluntarily suspended trading on the ASX, pending talks with major shareholders.
The company is seeking to refinance the project, which will produce lead, copper and zinc concentrate at the Tarago district mine. The ASX announcement stated this was in response to a "working capital deficiency that has been caused by delays in ramping up operations."
Heron won state government approval in 2016 to extract 1.5 million tonnes annually of the ore concentrates over 10 years from Woodlawn.
The project is seven months behind schedule. Company secretary and general manager of finance, Simon Smith, confirmed the delays were related to a dispute with Sedgman, the outfit contracted to build a $109 million processing plant. In March, Sedgman claimed an extra $53m for the work, which Heron challenged. The parties have been in dispute since but work on the processing plant has proceeded.
"They have not finished commissioning of the crushing circuit," Mr Smith said.
"We have the keys to some of the site but not all."
He would not comment further on Mr Taylor's dismissal, saying it had been a board decision associated with the delay. The company had to cover these costs at a time when it wasn't generating revenue.
Talks have been underway with the three major equity firms backing the venture, with a view to recapitalisation. Heron advised the ASX last week that these discussions were "proceeding satisfactorily" and it expected to make an announcement at the end of September. Trading will remain suspended until then.
"It gives us time to come up with a solution to the issues," Mr Smith said.
"We are dealing with three firms across three time zones but we hope to announce very soon that we'll be recapitalised and back trading."
Mr Smith would not say how much more finance was needed. But in 2017 Heron announced that New York-based Orion Finance, Greenstone Finance of London and Minneapolis-based Castlelake were putting up $60m, $42m and $33m respectively towards the project. A further $32m was coming from new and existing shareholders.
The talks are underway with the three international companies.
"The challenge is we don't have a deal yet," Mr Smith said when asked whether Heron was confident of striking an agreement.
Next week's ASX announcement will also update investors on the Sedgman dispute. Mr Smith declined to comment at this stage. Heron refused to pay the claim, with Mr Taylor branding it in March a "ridiculous sum."
Mr Smith told The Post that all contracts signed before the trading suspension "remained afoot."
The 150 employees on site, many of them local, have been informed of developments. Mr Smith said all of them had been paid and the issues, being played out at a "corporate level," would not affect their future.
"Work has not stopped. It's business as usual and we're continuing to ramp up the site. The level of production will increase over time," he said.
Several thousand tonnes of zinc concentrate and about 1000 tonnes of lead concentrate have already been railed to Port Botany and Port Kembla from Goulburn.
Mr Smith said despite the financial shortfall, an independent review of the project in the past few months concluded there were "no fundamental technical or operational flaws."
"It is the same project that was funded in 2017 but it's seven months late. Once it is recapitalised we anticipate everything will work as planned and it will ramp up to nameplate stage," he said.
Meantime, recruitment is underway to replace Mr Taylor.
He has been associated with the project for more than eight years. Tri-Origin Minerals first floated Woodlawn Mine's resurrection in about 2007. Mr Taylor headed up that company's successor, TriAusmin, before taking the reins at Heron Resources.
He told The Post in May when processing started that it was an exciting stage after so many years' involvement.
While you're with us...
Did you know the Goulburn Post is now offering breaking news alerts and a weekly email newsletter? Keep up-to-date with all the local news: sign up here.