“The rapid changes in operations, including the break in production at German Creek, relocation to a NSW operation and redundancies, have resulted in cashflow difficulties for the company,” Bounty said in its quarterly statement.
Bounty is now assessing several options to raise cash, including a capital raising through the issue of up to 15% of shares currently on issue to unrelated, sophisticated investors. It is also assessing additional short-term facilities with its banks.
During the March quarter, the contract coal miner produced a positive operating cash flow of $41,000, compared with $1.82 million for the December quarter.
The result was attributed to the termination of the Aquila contract leading to lower revenues and timing differences, where payroll-related on-costs and GST related to high revenue and high headcount in the December quarter was paid in the March quarter.
Excluding one-off expenses, including redundancy payments and timing differences, payroll costs for most of the March quarter were down 40%.
While Bounty’s Bundoora contract was terminated early, the company has continued to operate at the site with a reduced workforce that is set to finish up on May 6.
“Bounty has endeavoured to retain its core workforce for new contracts, however 11 redundancies have been made, with a further 10 to be made in May 2009 at the completion of work at Bundoora,” the company said.
Bounty’s remaining workforce is currently at the company’s workshop or onsite at Peabody’s Chain Valley mine preparing for mining operations to begin before the end of April.
Work has already begun on a further short-term arrangement with Chain Valley.
In more positive news, Bounty has extended its run of zero lost-time injuries at the Aquila operation to more than 941 days and at Bundoora to 358 days.
Bounty closed yesterday down 12% to 2c.