It lives… Supreme Court saves Eastern Goldfields from the grave
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The Eastern Goldfields horror story has taken a new twist, with the Supreme Court of Western Australia calling off a winding up of the besieged gold play after it paid money owed to a contractor.
Mineral tester Genalysis Laboratory Services, which is owned by Intertek Minerals Group, lodged a wind-up application with the Supreme Court on Tuesday after claiming it hadn’t been paid $383,000 for services conducted at the company’s Davyhurst operation.
The Supreme Court ordered Eastern Goldfields (ASX:EGS) be wound up and a liquidator appointed. Shares in Eastern Goldfields were suspended from trading.
However, in a statement that came out after market closed yesterday, Eastern Goldfields said the money was paid on the day the Court heard Genalysis’ application and made its order.
The Supreme Court decided the winding up order should be set aside given the payment was made. It ruled Eastern Goldfields was solvent and creditors and shareholders of the company would be prejudiced if the winding up went ahead.
Genalysis, together with Investec, were supportive of the process to set aside the liquidator, with Investec providing a letter of support as part of the application. Liquidator HLB Mann Judd, who was appointed after the Court order, did not oppose the application.
“This is a good outcome for our employees, investors and contractors as it allows the Company to continue with its operations,” Eastern Goldfields executive chairman Michael Fotios said.
“Our focus has been on building Eastern Goldfields into a premier Australian gold producer through the recommencement of mining at the Davyhurst Mining Hub. With operations now well underway and gold being produced, the Board will now focus on addressing administration and management issues in front of the Company.”
Despite the news, Eastern Goldfields remains cash-strapped.
Eastern Goldfields had only $13,000 in the bank at June 30 while spending $9.7 million in 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.
The company expects its securities to be reinstated to quotation shortly, following the release of a more detailed announcement and discussions with ASX.