Lack of cash an issue for growing number of juniors

A GROWING number of junior companies are being questioned by the ASX about their ability to survive.
Lack of cash an issue for growing number of juniors Lack of cash an issue for growing number of juniors Lack of cash an issue for growing number of juniors Lack of cash an issue for growing number of juniors Lack of cash an issue for growing number of juniors

 

Kristie Batten

Hill End Gold has been the worst offender this year – copping a query on each of its four quarterly reports released in 2014, with its September report showing cash of just $A72,000 and estimated cash outflows for the December quarter of $300,000.

The company said it was in talks with investors and had “every expectation” that funds would be raised.

In his chairman’s address to the company’s annual general meeting last month, Hill End chairman Dr Denis Clarke said it was an “uncomfortable” time to be a junior.

“Many junior exploration companies have failed for want of working capital, and survival of much of the remainder of the junior exploration industry worldwide remains in serious doubt,” he said.

“Hill End Gold is not immune to these troubles.”

One of the most challenged juniors is Mount Burgess Mining.

After having negative cash of $412,000 in the December 2013 quarter and negative $388,000 in the March 2014 quarter, its position has marginally improved to $16,000 at the end of June and $17,000 at the end of September.

The company spent most of the past 18 months in legal action to protect its interest in the Kihabe lead-zinc-silver project in Botswana, on which it has spent $14.5 million.

Mount Burgess told the ASX it had received a $15,000 loan and was carrying out an $18,000 placement, which will still leave the company in a critical condition.

Brighton Mining Group is another repeat offender and remains in serious trouble.

The company had only $62,000 at the end of September, an improvement on the $2000 it held at the end of June.

Brighton was suspended by the ASX in October for not paying its listing fees, but told the market on Tuesday that it had arranged loans and was being financially supported by its major shareholders.

Fox Resources recorded negative operating cashflows for the September quarter of $793,000 and only had cash of $118,000.

The company estimated cash outflows for the current quarter would be $547,000, prompting a query.

In its response, Fox said it was seeking to sell the Bundaberg coal project in Queensland and in October said an independent valuation obtained provided a preferred value of $17.9 million for the property.

Fox chairman Terry Streeter’s entity Jungle Creek Gold Mines is also supporting the company via loan agreements.

Australia United Mining reported massive cash outflows of $1.5 million for the past quarter, but closed September with only $241,000.

Last week the company announced plans to raise $2.23 million.

Likewise, DGR Global, the largest shareholder in takeover target Orbis Gold, last week obtained a $C2 million loan after having only $A62,000 at the end of last quarter.

Despite being in talks to acquire a Mexican silver project, Silver Mines only had available cash of $77,000 at the end of the third quarter.

But the company has signed a deal with private investors which could see it receive up to $1.2 million and assured the ASX it would have sufficient funds to survive.

Krakatoa Resources had $48,000 at the end of September and has been queried on its cash position the past two quarters.

However, the company managed to raise $145,000 this week and said it had a $5 million standby loan available to it.

Some of the juniors queried at the end of June have had mixed progress since.

General Mining Corporation still had only $12,000, KalNorth Gold Mines, which has been suspended, had only $132,000 and Black Ridge Mining held just $52,000.

But Platypus Minerals, which held only $70,000 at the end of June, raised $515,000 recently.

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