Blackham limps on as creditors give it another two weeks
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Struggling Blackham Resources has another two weeks to sort its debt problems out as chairman Milan Jerkovic takes control of the board.
The gold miner’s (ASX:BLK) major creditor Orion has given it until January 15 to pay around $15 million in debt, which was due on December 31.
They haven’t explained how they intend to refinance the loan or who they’re talking to, saying only that they’re in negotiations.
Blackham has been suspended from trading since November and will remain so until it refinances. It last traded at 10.5c.
Blackham got into trouble last year after lofty promises in 2016 to turn the Wiluna gold mine into a 200,000-ounce-a-year treasure trove fell flat once production started.
It barely managed to produce 39,000 oz in fiscal 2017 when they said they could get 60,000 — 70,000 oz, and were selling gold for $400/oz — $700/oz below what they were producing it for, according to Stockhead calculations.
A $50 million loan deal with Pacific Road Capital in December fell apart a week before the December 31 Orion deadline.
As part of the latest refinancing plan, Blackham has convinced their main contractor MACA (ASX:MLD) as well as gold offtaker Osisko Bermuda to enter a standstill agreement, where the creditors have agreed to suspend demands for repayment.
MACA says the in principle deal is subject to due diligence and expected to be be finalised during the next two weeks.
Entitlements issue round II
After the urgent Orion debt is refinanced, the company intends to have another go at an entitlements issue.
The last one, a partly-underwritten $12.3 million fundraising round at 12c a share launched before Christmas, was called off after the Pacific Road deal fell through.
The next issue will be for $36 million to recapitalise the company, but almost all will likely need to pay off its debts: Blackham was carrying $36.7 million in debt at the end of the September quarter.
Still selling the dream
Mr Jerkovic has become executive chairman and plans to take a leading role in both operations and management alongside managing director Bryan Dixon.
He told the market that they believe they can turn things around in 2018.
“Whilst 2017 has been a tough year for Blackham, the 2018 operational outlook for our Matilda-Wiluna gold project is very strong,” he said.
“The recapitalisation will ensure that Blackham is fully financed with a strong balance sheet to enable it to close out its finance facility with Orion in 2018 and to execute on its forward plans, which will include significant ongoing exploration drilling targeted at both new deposits and at increasing gold reserves.”
Mr Jerkovic says reserves stand at 15 million tonnes at 2.5g/t for 1.2 million oz and it has a gold resources of about 6.5 million oz.