Page 6 - pd296-August21-mag-web

neWs

Heron appoints administratorseron appoints administrators
H

Heron appointed FTI Consulting as voluntary
administrators last month after conceding it
could not land the funding package required
to restart operations at Woodlawn in NSW

eron Resources Ltd has entered vol- Gascoyne Resources Ltd, said the objec- mandated it to explore various options for
Huntary administration after failing to tive was to bring Heron out of administra- Woodlawn. At the time, the company was
secure the necessary funding to restart tion as soon as possible. granted a further 12-month extension of
operations at its troubled Woodlawn zinc- “We are committed to working with the the senior debt facility wavers with Orion
copper mine in New South Wales. Heron management team and will shortly until what would have been August 13,
FTI Consulting’s Chris Hill, David commence a process seeking interest subject to a number of conditions including
McGrath and Mike Ryan were appointed from parties for the participation in the continuation of the strategic process.
voluntary administrators of Heron and company’s recapitalisation,” Ryan said. In a statement to the ASX at the time,
its five subsidiaries on July 16. The deci- Very little has gone right for Heron since newly appointed Heron chief executive
sion came almost a year after the com- the lead-up to first production from the Tim Dobson said: “It has been a challeng-
pany’s board initiated a strategic process new Woodlawn mine in May 2019. At the ing time for Heron since taking the difficult
to explore all options for the future of time the company was facing two progress but right decision to suspend operations
Woodlawn, including refinancing, JVs and claims from its EPC contractor Sedgman at Woodlawn in March...and we acknowl-
partial or complete divestment. for amounts which exceeded a previously edge the patience and support of our cred-
In a statement to the ASX, Heron said agreed guaranteed maximum price con- itors during this period.”
it had conducted a “comprehensive and tract value. Heron reported a cash position of just
wide-ranging process”, including engag- Both claims were dismissed by the con- $9.2 million in cash (including bonds of
ing with more than 90 organisations, in an tract superintendent, but the legal case $3.7 million) at March 31, with no mining or
effort to secure a suitable transaction to forced the planned start of production to exploration work completed at the project
bring Woodlawn back online. be pushed back by three months due to over the course of the year so far.
“With creditor forbearance coming to delays in completing the construction of Paydirt attended the soil turning cer-
an end next month, and none of the alter- the process plant and the subsequent emony at Woodlawn in August 2017 with
natives investigated during the strategic ramp-up taking significantly longer than Taylor and other members of the Heron
process being capable of implementa- expected. management team. At the time the com-
tion before then given the current capital Things then went from bad to worse. pany was forecasting future production
structure of the company, the appointment Before the first concentrate shipment had of 40,000 tpa zinc, 10,000 tpa copper,
of administrators to the group companies left Woodlawn, longstanding manager di- 12,000 tpa lead, 900,000 ozpa silver and
has been made with a view to effecting a rector Wayne Taylor was asked to stand 4,000 ozpa gold over an initial mine life of
restructure and recapitalisation through down, with the company forced to explore 9.3 years.
the administration process,” the company an initial recapitalisation in the wake of a Woodlawn was also to be the third Aus-
said. working capital deficiency caused by the tralian-based zinc operation to be restarted
“Heron’s board of directors would like delays in the ramp-up. inside 12 months, alongside Queensland-
to thank its employees, counterparties Heron first announced a standstill based Century (New Century Resources
and shareholders for their support to date, agreement with it senior debt provider Ori- Ltd) and Thalanga (Red River Resources
and particularly during the difficult circum- on Mine Finance in September 2019, just Ltd), both of which are still operating.
stances since the outbreak of COVID-19 days before unveiling a $91 million funding The original Woodlawn mine stopped
during the Woodlawn ramp-up and the package to underpin the pathway to posi- producing in 1988 and has since been
placing of the mine into care-and-mainte- tive cash flow from Woodlawn. Despite a converted into an eco-recycling waste pre-
nance.” steady few months of production, including cinct separate to where Heron restarted
FTI has indicated it will continue care- the delivery of first concentrate shipment, operations.
and-maintenance activities at Woodlawn, operations were suspended in March – Michael Washbourne
about 250km south-west of Sydney, while 2020 during the height of the pandemic
it undertakes a process to restructure and and were never restarted. Paydirt’s base metals features starts
refinance the Heron business. Azure Capital was appointed financial on page 78
Ryan, who was behind last year’s suc- advisors to the strategic process on Au-
cessful recapitalisation of gold producer gust 20 last year after the Heron board

Page 6 aUgUST 2021 aUSTRaLIa’S PaYDIRT