PERTH (miningweekly.com) – Junior A-Cap Resources on Friday said that the voluntary administration of gold developer Wiluna Resources would not create any new liabilities for the company.
A-Cap is in a joint venture agreement with Wiluna, and holds a 55% interest in the cobalt, nickel and associated reserved minerals at the Wilconi nickel/cobalt project.
The company has the right to acquire an additional 20% interest in the Wilconi project for a further A$1-million in cash and a$1.5-million in share payments to Wiluna, following the completion of a definitive feasibility study.
A-Cap said on Friday that the company was engaging with the Wiluna administrators in respect of its rights triggered by Wiluna going into administration, including acquiring Wiluna’s entire 45% share in the Wilconi joint venture.
Wiluna went into administration days after the resignation of executive chairperson Milan Jerkovic, and a May capital raise of A$84.5-million to combat ramp-up delays at its Stage 1 operation, in Western Australia, caused by Covid-19 and skilled labour shortages, as well as inflationary cost pressures, the war in Ukraine, shipping delays of key equipment and delays to concentrate sales.
Administrators FTI Consulting said earlier this month that new management at Wiluna, which had been hoping to reset the mine plan in order to take advantage of the 5.5-million ounce resource at the Wiluna project, had advised the administrators that there was insufficient working capital to bridge the project and to complete the development of the reset mine plan.
Management said that the insufficient funding was due to the impact of increasing cost pressures, tightening terms of creditor payments, the impact of Covid 19 on staff availability, project ramp up issues and worldwide shipping constraints.
Although Wiluna Mining has investigated options to address that cash flow shortfall, through obtaining financial accommodation from creditors and shareholders, it has become apparent that those options will not successfully address the cash flow shortfall in the time available. As a consequence, the Directors have determined to appoint Voluntary Administrators to Wiluna Mining.
The administrators will continue to operate Wiluna on a ‘business as usual’ basis while reviewing operating and recapitalisation options, and is expected to hold the first statutory meeting of Wiluna’s creditors on August 1.