In short:
Calidus Resources, the ASX-listed company behind a major Pilbara gold mine, has been placed in receivership.
Its Warrawoona gold project has only been operational for two years.
What’s next?
Receivers have told the ABC they plan to continue operations on site and hope to sell and recapitalise the business.
The company running one of Australia’s youngest gold mines has collapsed under debt, despite record-breaking conditions in the global market.
Macquarie, the main financier of Calidus Resources, called in receivers KordaMentha for the ASX-listed company at the weekend.
Calidus Resources began operations at its Warrawoona gold project, south east of the remote town of Marble Bar in WA’s Pilbara region, only two years ago.
The company also owns 40 per cent of the Pirra lithium project, which it has been developing in the Pilbara alongside one of the world’s largest lithium miners, SQM.
In an announcement to shareholders, KordaMentha’s Richard Tucker and John Bunback said they were undertaking an urgent assessment of operations and would be starting a recapitalisation and sale process for Calidus.
“Right now it is business as usual at Warrawoona and the associated sites and there have been no job losses,” a KordaMentha spokesperson told the ABC.
“We can confirm we’ve already received some serious interest in the sale, which is to be expected given the value of the asset and current all-time high gold prices.”
ABC News: Cason Ho
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Price of gold not the reason for downfall
Independent analyst Peter Strachan has been watching the price of gold rise to record highs over the past 12 months.
“The gold price is over $3,500 per ounce — it’s within $200 of its all-time high,” he said.
But mining for gold in the Pilbara provides significantly more challenges than in the south of the state, where the bulk of the country’s gold resources are located.
The Pilbara’s ancient ground means the rock is very hard, expensive to explore and mining companies do not have much experience in searching for the “nuggety” conglomerate type of gold being found in the region.
“You need to have enough gold coming out of the ground to make it work when you have ongoing costs,” he said.
Acknowledging the high price of gold, Mr Strachan said other factors may have caused the Warrawoona gold project’s collapse.
“At the end of March [Calidus] still owed Macquarie bank $61 million in debt, and to service that debt they had about $8 million of cash in the bank,” he said.
“I suspect the bankers have really pulled the plug on this and are looking to sell the assets and recoup their $61 million.”
Mr Strachan had not lost hope in the future of the Pilbara’s gold mining industry.
“There’s gold in the ground there,” he said.
“Someone will be able to do it on a lower budget than Calidus was able to achieve.”
### Challenges of Mining in the Pilbara
While the global market conditions for gold have been favorable, mining for gold in the Pilbara region poses unique challenges compared to other parts of Australia. The hardness of the ancient ground in the Pilbara, the expensive nature of exploration, and the lack of experience in mining the conglomerate type of gold found in the region can make operations more challenging and costly.
### Future Prospects in the Gold Mining Industry
Despite the setback faced by Calidus Resources, there is optimism regarding the future of the gold mining industry in the Pilbara. Analyst Peter Strachan believes that the abundant gold reserves in the ground present an opportunity for other companies to succeed where Calidus could not. With careful budgeting and operational efficiency, future projects in the region hold the potential for success.
