Embattled minnow Winmar Resources remains confident of finding a new flagship project as it seeks to slash costs including pulling out of a joint venture with collapsed Kimberley Diamonds.

Winmar (ASX:WFE) is reducing staff salaries and director fees by 50 per cent to stretch its recent $492,000 placement and rights issue.

The cost reductions kick in from December 1.

Despite the news, investors weren’t happy, pushing the shares down 50 per cent to 0.1c, capitalising the company at just $2.5 million.

Winmar Resources shares over the past year. Source: Investing.com
Winmar Resources shares over the past year. Source: Investing.com

Director fees for non-executive chairman Alex Alexander and non-executive director Noel Halgreen have been cut 30 per cent to $70,000 and 20 per cent to $40,000 respectively.

Salaries of managing director Rod Sainty and general manager Andrew Bray have been cut by 60 per cent to $88,000 and 59 per cent to $57,000 respectively.  The salary reductions will apply once a new lead project is secured.

The latest cost-cutting comes a day after Winmar withdrew from a joint venture with Kimberley over the Lomero project to reduce costs.

Kimberley is a controversial diamond play which entered voluntary administration in June 2015 after suspending operations at its Ellendale Diamond on the back of lower recovered grades and lower size distributions along with significantly lower realised prices at a Belgium diamond auction.

Winmar previously told Kimberley’s administrators of its interest in acquiring the project outright. However, the project remains subject to administration process.

A range of opportunities

Winmar’s focus is on finding a new quality mineral project and is looking at a range of opportunities in gold, copper and zinc as well as lithium and cobalt.

Its recent $492,000 raising will help in the purchase.

“Multiple projects have been reviewed and advanced discussions held with several vendors,” Winmar managing director Rod Sainty said.

“I am optimistic that an attractive project can be secured within coming months. We are working diligently to create a new phase of growth in value for our shareholders.”

In July, Winmar relocated its business premises out of the Sydney CBD to reduce monthly office lease expenditure, resulting in an annual saving of $120,000.