24/06/2020 - 14:44

Administrators wary on Hanking plan

24/06/2020 - 14:44

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The administrators of Gascoyne Resources have recommended creditors support the planned deed of company arrangement for the gold miner rather than an 11th hour alternative from China’s Hanking Gold Mining.

Administrators wary on Hanking plan
The Dalgaranga gold project is one of Gascoyne Resources' ventures.

The administrators of Gascoyne Resources have recommended creditors support the planned deed of company arrangement for the gold miner rather than an 11th hour alternative from China’s Hanking Gold Mining.

In a note to creditors, the administrators from FTI Consulting said their recommendation was unchanged “given the uncertainty and probable delays associated with the Hanking proposal”.

Hanking’s proposal was submitted on Monday, two working days after FTI released details of the DOCA.

Creditors, including contractor NRW Holdings, are due to meet tomorrow to decide on the company’s fate.

FTI’s Michael Ryan said the administrators do not consider that creditors can approve the Hanking proposal at tomorrow’s meeting, given the limited time to consider this option and uncertainty on its terms.

However, creditors can adjourn the meeting so further analysis of the Hanking proposal can be undertaken.

FTI has written to Hanking seeking further details on its plan, including its funding source.

The administrators said the need for Foreign Investment Review Board approval was one of several risks surrounding the Hanking proposal.

They confirmed today that Hanking has not yet applied to the FIRB.

The administrators also described the Hanking proposal as conditional, as it required approvals for debt facilities, renewal of the NRW mining contract and an underwriting agreement.

Hanking’s proposal would see unsecured creditors paid in full ahead of a planned $90-$100 million capital raising, to be managed by its adviser Argonaut.

Hanking would emerge with a 20-30 per cent ownership stake and 1-2 seats on the 5-member board.

The early payment to creditors is based on Hanking making an upfront contribution of $16 million prior to completion of the capital raising and prior to Foreign Investment Review Board approval.

Under the DOCA, unsecured creditors would be paid from a $70-$80 million raising, with larger unsecured creditors paid in tranches.

The Hanking proposal also offered a higher cash return to NRW.

Gascoyne was placed into administration in June last year.

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