Liquidation court order forces gold producer Eastern Goldfields into suspension
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Troubled gold producer Eastern Goldfields has been forced to suspend trading of its shares following a court order to appoint a liquidator.
Eastern Goldfields (ASX:EGS) entered into a trading halt this morning after receiving the wind-up order.
Minerals-testing business Genalysis Laboratory Services, a group owned by Intertek Minerals Group, is reported to have lodged the wind-up application yesterday. Genalysis has previously provided assays to the Eastern Goldfields from drilling conducted at Davyhurst.
“The securities of Eastern Goldfields Limited will be suspended from official quotation immediately pursuant to listing rule 17.3, following the Supreme Court of Western Australia ordering that the Company be wound up and that a liquidator be appointed to the Company,” the company said in a statement.
In a separate statement, Eastern Goldfields creditor and Fotios controlled company Investmet Limited said it was in the process of applying to set aside the Court appointed liquidator.
“Eastern Goldfields has been in open discussions with the creditor who was paid yesterday,” Investmet said.
“The creditor and Eastern Goldfields’ primary financier Investec are supportive of the process to set aside the liquidator and both have committed to providing a letter of support as part of the application.
It is not anticipated that Eastern Goldfields will remain in liquidation and is expected to come out of suspension as soon as the legal process is resolved.”
Last week the cash-strapped gold producer made last-minute contractor payments to stave off a protest at the Diggers and Dealers conference in Kalgoorlie.
Eastern had been dogged by claims of late payments to contractors who worked on its new Davyhurst plant.
A group of Kalgoorlie-based suppliers threatened to protest chairman Michael Fotios’ speech at Diggers and Dealers last week — but the protest was called off after a series of last-minute payments.
Eastern Goldfields had only $13,000 in the bank at June 30 while spending $9.7 million n the quarter. In the previous quarter the company spent $4.6 million and had $551,000 in the bank.
Mr Fotios said the cashflow issues had been due to an investor who cancelled support for a capital raising after GR Engineering Services — one of the contractors working on the Davyhurst mill refurbishment — sued the gold miner in July for alleged non-payment of $9.9 million.
At the time, Eastern Goldfields said GR Engineering stopped work on the mill in May, and claimed they found defects in the contractor’s work that delayed the mill launch.
GR Engineering, however, said the original $12.5 million budget had blown out to $18.5 million, and it had completed the work it was contracted for.
Eastern Goldfields completed the first gold-pour at its new Davyhurst plant last Thursday and delivered to the Mint the following day, a company statement said yesterday.
MORE TO COME.