Reed chief resigns as company takes $70m hit

Reed Resources chief executive Luke Tonkin has tendered his resignation, after just more than 14 months at the helm of the struggling gold miner, which also detailed $70 million of asset impairments today.

The company provided an update to investors today, saying that Mr Tonkin would step down from the role by the end of September, following Reed placing its producing Meekatharra gold operation into the hands of administrators last month.

Chris Reed will replace Mr Tonkin as chief executive on a scaled-back remuneration basis.

In other restructuring changes, the company’s board of directors will be reduced to one executive and three non-executives, including chairman David Reed.

Director Cobb Johnstone will also step down from his position, David Reed said.

David Reed said he would provide the company with a $3 million standby facility to ensure the company remained afloat over the next 12 months.

“I also foreshadow that we will be reviewing the company’s governance structure leading up to the 2013 AGM and will be making recommendations at that time to ensure its revitalisation and suitability for the company’s future,” he said in a statement.

Reed also provided impairment guidance for the 2013 financial year today, saying it would take a $62.3 million hit on the Meekatharra project and a $3.3 million hit on the Comet Vale gold mine.

The company will also take a $3.3 million impairment on its Mt Finnerty iron and nickel projects, and a $400,000 write-down of the Barrambie vanadium deposit.

“The asset impairments have arisen due to a combination of factors, including declining gold prices, future commodity price and exchange rate assumptions, life on mine plans and operating and capital cost estimates, as at June 30,” Mr Tonkin said.

Reed Resources shares were savaged on the ASX today, losing more than half their value to finish at 2.4 cents.