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Norseman Gold seeks creditor protection after tough quarter
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Sunday, 07 Oct 2012
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Australian gold miner Norseman Gold has appointed an administrator to its main operating subsidiary CNGC after production problems at the Norseman mine left it short of cash. The appointment of the administrator will give Norseman a five week breathing space to deal with its suppliers and other creditors.

Major shareholder Tulla, the vehicle of mining tycoon and executive chairman Mr Kevin Maloney has agreed to take on debts owed by Norseman to Red Kite group and also agreed to indemnify the Administrator in relation to his costs. As a result, Tulla now directly and indirectly holds approximately AUD 25 million in secured debt.

Norseman’s directors said they propose to submit a deed of company arrangement for consideration of creditors that will provide for the continuation of the business of CNGC and control to be returned to them.

The miner added that while the agreement between Tulla and Red Kite had resolved the immediate financial difficulties faced by the company, its shares will continue to be suspended both in Australia and on AIM while the administrator is in charge of CNGC.

Norseman is one of the oldest mines in Australia. The company had budgeted for 17,000 ounces of gold to be produced in the quarter to September but heavy rain, equipment failures and incorrect data points at its North Royal pit plus the closure of the Harlequin underground mine due to safety concerns meant it came in well short of that target.

The company said that this created significant short term cash flow issues. The mill was also closed due to mechanical and maintenance problems with the last gold sale swap occurring on September 11.

Mr Ron Dean Willcocks of Dean Willcocks Shepard who has been appointed administrator to CNGC said that he intends to continue to run the Norseman Mine as a going concern.

Source - Proactive Investors.com

(www.steelguru.com)

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