Administrators BRI Ferrier said Bounty was in a strong position in December, reaching production targets in its contracts with Anglo Coal’s Aquila colliery and Bundoora mine in Queensland and in contract negotiations with for Peabody's Chain Valley operation near Newcastle.
But Anglo ended both the Aquila and Bundoora contracts in the following months as lower metallurgical coal prices led to production cuts.
Making matters worse, production at Chain Valley did not start until April-May, with Bounty cutting its workforce from 165 to 40.
The equipment Bounty was operating in Queensland did not meet compliance requirements in New South Wales, also causing delays to the Chain Valley contract.
BRI said the costs associated with relocating and mobilising the equipment to Chain Valley led to severe cash flow difficulties.
On July 31, a major equipment breakdown triggered the loss of one week’s production at the mine, disrupting a planned ramp-up and profitability from the contract.
Subsequently, Bounty arranged a $100,000 loan and planned for a further $400,000 equity injection, but this money “was never made available”
BRI was appointed on August 10. It cited the falling world price of coal and the compounding effects of the global financial crisis as factors leading to Bounty’s insufficient cash position.
The flow-on cost linked to the loss of the Anglo contracts, especially the redundancy payments, were another blow.
Lastly, BRI said Bounty had experienced recurring breakdowns of plant and equipment and associated disruptions in production.
For the year ended June 30, Bounty had an unaudited loss of $2.37 million, up from $2.05 million loss the year previous but down from $3.36 million loss at the end of June 2007.