Navigator Resources’ struggle to raise funds has ended for the worse with administrators called in and about 200 workers being laid off.
Pitcher Partners managing director Bryan Hughes has been appointed administrator as Navigator continued to lose money on its flagship Bronzewing Gold Project, despite a run of increasing loans from major shareholder Au Mining.
Mr Hughes told WA Business News mining had ceased immediately and an urgent review of the company's flagship Bronzewing Gold Project would be undertaken with a view to placing it onto a care and maintenance program to minimise any further losses.
Ore already mined was continuing to be processed through the mill but Mr Hughes said he was uncertain how long that would continue.
About 200 workers (including contractors) have been laid off from the 100,000 ounce per year project as a result of the administration.
The miner’s struggles began when it first negotiated short term working capital from significant shareholder Au Mining in June 2012.
The $10 million loan was provided on the condition Navigator would undertake a rights issue to repay the debt, with any additional amount invested into developing the Bronzewing Project.
Lodgement of the rights issue was continually delayed through 2012, however, with the final result being a 58 per cent shortfall.
The rights issue gave Au Mining 68 per cent control over Navigator.
In February this year Navigator announced Au had agreed to increase its loan to $15.5 million, which was quickly followed by another announcement a week later stating the companies were in discussions over yet another increase.
Those negotiations were around increasing the debt once again to a total loan of $17.5 million - which Navigator had fully drawn down less than a week later.
In addition to the debt owed to Au Mining, Navigator also owed Canadian creditor Waterton Global Value about $13.5 million.
Mr Hughes said debts to suppliers and contractors were in the range of $10 million, but said the project included "fairly solid assets" which were likely to attract interest.
"It's a fairly valuable asset in terms of the amount of gold that we have in the ground," Mr Hughes said.
"We don't know what it's all worth and we're working it all out at this stage, but there's some pretty solid assets out there and there's some prospective parties who may be interested in acquiring them."
Navigator’s financing struggles were compounded by both mining and processing difficulties at Bronzewing; rain reduced the amount of ore mined from Bronzewing by about half in January, while issues with the crushing facility forced the company to bring in a mobile crusher.
The problems prompted Navigator to issue a warning that the operating cash flow for the March quarter was expected to be a deficit more severe than the negative $3 million reported in the December quarter.
