Tungsten producer Wolf Minerals has appointed administrators after it was unable to lock in a crucial funding deal.
“The company has been unable to satisfactorily conclude its discussions with its key financial stakeholders and therefore is not in a position to meet its short-term working capital requirements in order to continue operations at its Drakelands open pit mine,” Wolf (ASX:WLF) told investors late yesterday.
The company had been working with its key financial stakeholders to come up with longer term funding solutions before the expiry of a “standstill” period on October 28.
A standstill period is where a lender pauses its demands for repayment and grants the borrower more time to restructure its debt.
Wolf was expecting to finalise the talks this week but said if it could not successfully complete a deal it wouldn’t be able to meet its short-term working capital requirements.
The company is generating cash flow from its Hemerdon tungsten and tin project in Devon, southwest England, but at the end of June it had $115.7 million worth of outstanding debt and less than $20 million in cash.
- Subscribe to our daily newsletter
- Bookmark this link for small cap news
- Join our small cap Facebook group
- Follow us on Facebook or Twitter
Just before the end of the June quarter it secured an additional £65 million ($120.2 million) loan from Resource Capital Fund VI.
Wolf was also estimating a cash burn of $39.5 million for the September quarter.
The company needed the extra cash to support the ramp up of production from its Drakelands open pit.
Wolf’s wholly owned subsidiary Wolf Minerals (UK) Limited has now ceased trading and administrators have been brought in.
The company has appointed Martin Jones and Ryan Eagle of Ferrier Hodgson as voluntary administrators.
Wolf will remain suspended from trading on the ASX.