A 'great blow': Administrator confirms job losses
THE administrator of Goondicum mine near Monto has confirmed 38 employees have been made redundant as of Tuesday.
Administrator Bryan Hughes, chairman of Pitcher Partners, said the workforce has been brought down to a "care and maintenance" level.
It's believed around 50 employees were directly employed at the mine, which only reopened in November 2018 after closing in July 2015 due to weak ilmenite prices.
The administrators were called in on Sunday, Mr Hughes confirmed.
A creditors meeting will be held at Monto Shire Hall at 10.30am on Tuesday, September 17.
A former employee of the mine told the Times that workers' employment arrangements "explicitly state that we're not allowed to disclose 'confidential information', of which the conditions of our employment and subsequent termination is considered as such".
"This condition continues after we're no longer employed," the person wrote.
Monto councillor Paul Lobegeier described the news as a "great blow" to the town.
"This is not the first time this has happened," Cr Lobegeier said.
"It shows how fragile the mining industry can be," Cr Lobegeier said.
He said the closure would affect the town two ways: the "immediate" affect of local workers losing their jobs, and the "flow-on" effects.
"Our big fear is the domino effect," he said, noting that mine employees tended to be some of the "larger renters" in town.
Cr Lobegeier said some small businesses in town were owed a "substantial amount of money".
"They're concerned, they're worried," he said.
"As one business said to me, 'Should we have done it?'
"And I said to them, 'Well, it was a different company this time'.
"It's like putting a crop in the ground and a flood comes.
"Mining is risky stuff, farming is risky stuff.
"Do we as humans stop taking the risk?"
He said he believed Monto had the resilience to pull through.
"It's a test of resolve for the community, it's a test we've gotten through before," Cr Lobegeier said.
"We roll with the punches and come back up.
"I've got every faith in this community having a depth of inner strength."
Goondicum mine's operators Melior Resources posted a notice on the Toronto Stock Exchange saying in the opinion of the directors of its subsidiaries, Goondicum Resources and Melior Australia, "the Subsidiaries are insolvent or are likely to become insolvent at some future time."
"The subsidiaries have been unable to obtain additional funding necessary to satisfy the ongoing cash needs of the business resulting from the continuing production underperformance at the Goondicum mine," the notice said.
He said the mine had been experiencing "a number of technical issues", including with the "quality and grade" of the ilmenite.
Grade refers to the quantity or percentage of mineral, in this case ilmenite, present within mined ore.
This led to "viability concerns", Mr Hughes said.
He said Pitcher Partners have now begun undertaking a "technical review" of the mine site.
Initially, this will involve an "infill drilling program".
Infill drilling programs are used to test for the consistency of minerals in mine sites.
At Goondicum, this was originally done at a space of 120m apart.
However, as part of the technical review, the spacing between infill drill holes will be reduced to 40m.
"This will give us better information about the ore body," Mr Hughes said.
This review could result in the identification of new capital expenditure requirements, Mr Hughes said, which could lead to a "whole new financial model" being needed.
"The good news is that the product (ilmenite) is enjoying strong demand, as long as the quality and quantity is there," he said.
Mr Hughes said at this early stage of his investigations, he expected a pause in operations "of around six months".
"If it's less, great, if it's more, that's not unexpected," he said.
He said he wasn't able to say whether the technical issues at the mine should have been picked up at the due diligence phase.
"We're all geniuses in hindsight," Mr Hughes said.
"Whenever you ramp up production, there's always teething issues.
"As you go on, you hope there's less rather than more, but that hasn't happened, so it's time to take a step back.
"My current focus is to look for a way forward."