Gold processing delays give Empire a ‘short-term’ funding headache
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Delays at Empire Resources’ Penny’s Find gold mine in Western Australia have resulted in some financial difficulties for the junior miner.
Cash flow from the operation, which began production in the December quarter, has been slower coming in than expected due to a number of mining and toll treatment delays.
On its first day back on the ASX after a week suspended from trading, Empire’s (ASX:ERL) shares slid 5.6 per cent to 1.7c.
Mining services contractor Blue Cap Mining had previously agreed to fund mining and related costs at Penny’s Find up to a maximum of $7.5 million until the operation became cash flow positive.
Empire has so far repaid $5.1 million of the total $8.4 million loan, which includes a facility fee, but the balance was due to be paid by the end of January.
The company has now had to defer its final debt payment to Blue Cap Mining until it receives the cash from its next toll treatment campaign.
“Unforeseen delays, such as inclement weather and issues with one toll treater used last year … resulted in lost opportunities to mill more ore and lower than expected cash inflows,” Empire told investors on Tuesday.
Empire had been processing its gold through Maximus Resources’ Burbanks plant near Coolgardie, but in December terminated the toll treatment agreement because the mill was too far away and transport costs were high.
Instead, the company is now processing its ore through the closer Lakewood plant near Kalgoorlie.
Empire said it is confident it can work through the “short-term funding issue”.
About 25,000 tonnes of high-grade ore is currently stockpiled at the Lakewood plant in preparation for the next treatment campaign, which is scheduled to begin early in February.