A company that was aiming to revive copper and zinc mining near Tarago has entered voluntary administration.
Heron Resources notified the Australian Securities Exchange (ASX) of its decision on Friday. It followed failed attempts to secure what it described as a "suitable transaction" for the Woodlawn Mine project.
The company secured state government approval in 2016 to extract 1.5 million tonnes annually of zinc, copper and lead ore concentrates to produce 150,000 tonnes of concentrate, for up to 21 years.
The $240 million project was well down the track, with infrastructure in place and up to 100 employees onsite when Heron shut down operations in March, 2020. Some 90 workers were made redundant.
At the time, company CEO Tim Dobson cited the metals market downturn, the coronavirus impact on employee movements, but also past "under-performance."
Heron negotiated loan extensions with major backers and the mine has been in care and maintenance mode since.
In August, 2020 Azure Capital was appointed to investigate future options for Woodlawn, including refinancing, joint ventures, and partial or complete divestment.
"Since that time, Heron and its advisers have conducted a comprehensive and wide-ranging process, engaging with more than 90 organisations in an effort to secure a suitable outcome for its stakeholders and establishing a pathway to restart (the mine)," the ASX announcement stated.
But on Friday, the company said this had failed to yield an agreement that could be implemented before major financiers' loan agreements ended next month. These international backers had agreed to extend the loan terms during the shutdown. They included Orion Mine Finance, which had loaned $90m for the project.
FTI Consulting has been appointed as administrator to five Heron group companies, including Heron Resources Limited, Woodlawn Mine holdings Pty Ltd and Tarago Operations Pty Ltd.
It is aiming to restructure and recapitalise.
"Our intention is to continue the care and maintenance regime for the Woodlawn mine whilst we undertake a process to restructure and refinance the business, with the objective of bringing it out of administration as soon as possible," administrator Chris Hill said.
"We are committed to working with the Heron management team and will shortly commence a process seeking interest from parties for the participation in the company's re-capitalisation."
The Heron board expected restructure negotiations to occur with new and existing "stakeholders" and the secured lender.
Some six employees will be retained at the mine during the administration.
Creditors to lodge claims
FTI Consulting declined to comment beyond the ASX statement. As such, the total debt and number of secured and unsecured creditors are unknown.
Mr Dobson referred all comment to the administrators.
The first creditors meeting will be held on Tuesday, July 27 at 2pm via Zoom.
Mr Dobson said last July that all employees were paid their entitlements but acknowledged there was a "long list of creditors." Pybar Mining Services, which was delivering the operation, was one of the major ones. Mr Dobson declined to say the total owed.
Crawford Freight Lines and other Goulburn companies were also affected.
Local man Fred Speer's company, Northwest Labour Hire, was owed almost $200,000 for laying polypipe and undertaking site clean-up.
Last year he told The Post he had to put off employees and faced losing his business unless Heron paid up.
On Thursday he said the company had paid since him 80 cents in the dollar for the debt, following his repeated approaches.
"I signed away 20c, took what they offered and ran," he quipped.
"I had to take a job in South Sudan to support things. It was a bitter-sweet experience because 80 cents in the dollar is like paying 10 per cent GST. It took all the profit out of it so all the hard work was for nothing."
The Post understands creditors have been issued with paperwork to claim outstanding money.
Three options lie ahead. The administration could result in the company being returned to directors, a liquidation of assets or a deed of company arrangement with a new investor. FTI Consulting is aiming for the latter.
Tarago and District Progress Association president Kym Wake hoped for a positive outcome and said it was at least good news that the mine was in care and maintenance mode.
It's not the first time a Woodlawn mine operator has struck financial trouble. In 1998 some 150 workers lost their job when Denehurst Ptd Ltd went bankrupt and shut the mine. It subsequently struck a deed of company arrangement with waste company, Collex, for the Woodlawn bioreactor.
Collex paid the final installment of $6.5 million in employee entitlements in 2004.
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