Indochine Mining investors lose patience and force out board
Interests associated with Brian Rodan’s Australian Contract Mining are believed to be behind a board coup at Indochine Mining, which has been battling to develop the giant Mt Kare gold deposit in Papua New Guinea, which a Rio predecessor, CRA, famously abandoned 20 years ago.
Indochine has been seeking to raise funds from a cornerstone investor for months – most recently, it is believed, from China – to help it get the project under way.
But investors lost patience, on Thursday forcing out the recently installed chairman, Hugh Thomas, along with the chief executive, Stephen Promnitz, and another director, Robert Thomson.
In their place, a restructuring specialist, Dermott McVeigh, has been appointed the chairman.
Trading in Indochine shares has been suspended, with the company saying it is in discussions with “a substantial shareholder” regarding the future funding of the company.
In mid-2013, Mr Rodan’s Australian Contract Mining was brought in to handle plans to launch underground mining, with another Perth operator, GR Engineering, brought in for a range of engineering and construction advisory work on the project.
It is believed that Mr Rodan has about a $10 million exposure to Indochine, through a direct holding in its equity along with a loan facility provided to the company.
At the time, Indochine claimed it had boosted the size of the Mt Kare resource to 2.5 million ounces of gold equivalent, along with the outlining of some high-grade zones. The intention was to focus on extending these high-grade zones since they presented the option of a low-cost underground mine at lower costs than its earlier feasibility studies had indicated.
Subsequently, Indochine claimed it was targeting producing up to 200,000 ounces of gold annually at grades of 10 grams of gold a tonne from early 2015, at an all-in capital cost of less than $100 million, arguing the Mt Kare deposit bore many similarities with the nearby Porgera mine operated by Barrick mines.
But the decline in the gold price, which exacerbated fund-raising difficulties, slowed work on the project.
In March, for example, Indochine signalled a $20 million raising at 9¢ a share, which included selling a stake to a cornerstone investor along with a direct stake in the mine, although ultimately the issue raised just $3.4 million.
The shares last traded at 2.7¢, well below the most recent issue price.