CuDeco goes into receivership

CuDeco goes into receivership

Gold Coast-headquartered copper miner CuDeco (ASX: CDU) has entered receivership after a year marked by the total suspension of its Cloncurry mine, a glimmer of hope from a cobalt deal and a string of executive departures.

When founder Wayne McRae was touting the potential of CuDeco's Rocklands project in Cloncurry in 2006, shares in CDU reached as high as $7.11 but by the time the stock was suspended from trading in March 2018 it was worth less than 24 cents.

By then McCrae was no longer in the picture, having been ousted by majority shareholders in 2015, and confidence in the company had gone from bad to worse.

At the end of 2017, shortly after the Rocklands processing plant was shut down over safety concerns and the company had hailed record production, the company confirmed its annual report failed to comply with ore reserve listing rules.

It took another three months before that reserve was in order with an estimate of 11.6 million tonnes, but by then CuDeco was suspended from official quotation. 

It has been an uphill battle to rectify operational problems and secure financing ever since. 

In August last year CuDeco announced a "temporary" suspension of processing operations at Rocklands, which then chairman Peter Hutchison described as vital for the "future of this important asset for Cloncurry".

"During this period, our major shareholder representatives will continue to progress a number of funding initiatives which have been in active discussion for some time now and which we are confident will provide effective solutions to immediate and longer-term funding requirements," Hutchison said at the time.

In September the company entered into a Memorandum of Understanding with Cobalt Blue Holdings (ASX: COB), allowing the new partner to evaluate the levels cobalt-pyrite concentrate - a mineral that was not included in the ore reserve - at the mine.

In his address at CuDeco's AGM in November 2018, Hutchison said the majority the financial and operation review at Rocklands had been completed with anticipation for improved results.

He noted the recent departures of five key leadership figures including CEO Gongyang Jiang in July 2018, and it didn't take long before Hutchison himself resigned for personal health reasons on 11 December.

A year earlier the Rocklands mine employed around 330 people, but with the mine's operational suspension the company confirmed on 31 March 2019 that all non-essential employees were stood down "pending restart of operations".

In that update the company said it expected secure long-term funding to support Rocklands and seek other development opportunities in the region, while it would continue to work in partnership with Cobalt Blue to commercialise its cobalt resource.

The group also slated mining operations would be focused on sulphide ore which would be more suitable to the CuDeco processing plant.

"This will maximise copper concentrate production and cash flow generation during the next twelve months whilst affording the time to determine the optimal approach for the processing of gravity ore," the company said.

Since then another director, Zhaohui Wu, has resigned, and today it was confirmed Kelly-Anne Trenfield, Ian Francis and Michael Ryan of FTI Consulting had been appointed joint and several receivers and managers of CuDeco.

The appointment was made by China Tonghai International Financial Limited (CTIFL), who along with other lenders believed receivership would be in the best interests of all stakeholders in the company.

In conjunction with Argonaut Securities (Asia) Limited, the receivers have secured funding from CTIFL, Noble Resources International Pte Ltd and Valuestone Global Resource Fund I LP via its subsidiary Gemstone 101 Ltd to complete a comprehensive technical and financial review of the Rocklands project.

"A thorough technical and financial review of the Project will be conducted, and the Receivers and Lenders immediate priority is to explore all opportunities to maximise the value of the assets, either through the recapitalisation or restructure of the Company with a view to financing the resumption of income generating activities at Rocklands, or by a trade sale," the receivers said.

"The Receivers are also pleased to announce that they have engaged the services of Argonaut to act as Financial Advisor to assist with the asset realisation or corporate restructure of the Company and the Project.

"All interested parties are invited to contact Mr Greg Southee, Executive Director & Head of Asia at Argonaut to register their interest.

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