Hillgrove told the ASX this morning that its annual report, to be lodged today, will contain some “significant comments in the events subsequent to reporting a date and going concern note”.
It says it “should” be able to continue operating the copper/gold mine, if it can successfully implement cost savings.
Last December, the State Government gave the company an $850,000 grant as part of a “partnership” deal involving the relocation of Hillgrove’s head office to Adelaide.
Just a few months later, and Hillgrove is facing serious financial troubles, including breaching its trade creditor financial covenant in February.
While it obtained a waiver from its financiers for February, it was required to achieve 95 per cent of its payable copper production target for the May t0 March period.
It told the ASX today this plan was “too aggressive” and the target would not be met.
It said that while its planning shows Kanmantoo will generate “significant value”, it was likely to face a cash shortfall in 2016 and 2017 at current performance levels unless cost-reduction measures were implemented.
There will be an independent review of the company’s plans and forecasts and “a range of measures are being implemented to reduce costs and generate proceeds from asset sales”.
“Hillgrove has begun discussions with its key stakeholders including employees, major contractors, suppliers and service providers, financiers and the South Australian Government to seek their assistance with this process to ensure the company can bridge any cashflow gaps this year and into 2017,” the company said.
“If Hillgrove can successfully implement the package of measures with these stakeholder groups, it should be able to generate sufficient cashflow from operations to continue operating the Kanmantoo Mine.”
Local News Matters
Media diversity is under threat in Australia – nowhere more so than in South Australia. The state needs more than one voice to guide it forward and you can help with a donation of any size to InDaily. Your contribution goes directly to helping our journalists uncover the facts. Please click below to help InDaily continue to uncover the facts.