30/07/2008 - 22:00

Gold industry woes hit QFS Australia

30/07/2008 - 22:00

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Despite record prices, the gold sector has failed to glitter like other commodities, with the failure of marginal producers having a knock-on effect in the service sector.

Despite record prices, the gold sector has failed to glitter like other commodities, with the failure of marginal producers having a knock-on effect in the service sector.

The troubles have enveloped producers like View Resources Ltd, which brought in voluntary administrators in February, and Monarch Gold Mining Company Ltd, which appointed Bryan Hughes of Pitcher Partners in the same capacity in early July.

The dramas at those two companies forced the hand of human resources specialist QFS Australia whose founder, Brett Quinn, also had to appoint administrators after failing to receive about $525,000 in salaries owed for its labour hire services from those two mining companies.

According to QFS administrator, Derrick Vickers of PricewaterhouseCoopers, Monarch was the biggest creditor, owing $345,000.

Mr Quinn, who was behind the development of the Indigenous Work Ready program, remained positive about the situation, despite having to close the doors of the business he founded in 2005 and achieved a turnover of $10 million by 2006-07.

He said he had several options available to him including a capital injection, possibly from a mining player, or a merger, which he hoped to have finalised within the next few weeks.

"We are down but not out; expect to see us in the near future," he said.

Mr Quinn said that while he knew his clients were at the riskier end of the spectrum and believed he had good communication, the Monarch problems had been a surprise and he had learned much from his present circumstances.

His advice to anyone in business was to keep payment terms to the minimum possible, maintain good client relations, keep a spread of clients and, importantly, have enough capital as a contingency.

"I've questioned myself about what I would have done differently to avoid what has happened," said Mr Quinn, a 2008 WA Business News 40under40 award winner.

"Talking to people in different industries, it is a hard one to predict. Unfortunately we were hit so hard from a cash flow basis we were unable to trade."

Mr Quinn said only a small number of trade creditors had been hit by QFS's own issues.

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