NRW shares fall on Gascoyne collapse

Shares in NRW Holdings have fallen by as much as 13.5 per cent today, following a revision in its forecast for the second half of this financial year after Gascoyne Resources entered administration on Sunday.

In a statement, NRW said administrators FTI Consulting intend to continue operating Gascoyne on a ‘business-as-usual-basis’ while recapitalisation options are explored.

“NRW is supporting FTI Consulting during the review of recapitalisation options and will be paid for all the works undertaken in this period,” it said

NRW said its current exposure to Gascoyne includes a $35 million drill and blast and mining services contract, a secured loan of $10 million, and equity in the gold miner of $4.3 million.

The contractor’s equity in Gascoyne equates to around an 8.6 per cent stake.

NRW said it had anticipated EBITDA for the current financial year of between $140 million and $145 million, prior to the appointment of administrators to Gascoyne.

“The resulting net cash movement in the second half of FY19 is estimated at circa $8 million, as most of the working capital (circa $17 million) and secured debt exposure ($10 million) was incurred in the first half of FY19.”

NRW managing director Jules Pemberton said he was disappointed with the recent events at Gascoyne’s collapse but remained positive on the outlook for NRW.

“In addition, with key resources, both workforce and equipment, currently in high demand we remain confident that our personnel and equipment at Gascoyne’s Dalgaranga project can be easily redeployed in the event a recapitalisation is unsuccessful,” he said.

Gascoyne Resources went into administration two days ago, just more than two months after it raised $24.5 million from investors, and part of the funds were allocated to repay $7.2 million in debt owed to NRW.

Gascoyne failed to meet production targets at its flagship Dalgaranga project, located near Mt Magnet, after first gold was poured last May.

In March, its production guidance for the first half of the year was lowered from between 40,000 ounces and 45,000oz to between 29,000oz and 34,000oz.

Shares in NRW dropped 7.85 per cent to trade at $2.53 each at 2.20pm AEST.