Dale Elphinstone joins G6 board

Tasmanian manufacturing icon Dale Elphinstone has joined the Board of G6 metals as part of their recapitalisation plan, announced today.

Mr Elphinstone, who was already a significant investor in the company, is the founder of world-leading mining equipment manufacturer Elphinstone on Tasmania's north west coast, and was recently inducted into the Mining Hall of Fame. He is also one of Tasmania's richest men, reportedly worth just over $1 billion.

According to the company, their "transformative" recapitalisation plan announced today will significantly reduce debt, strengthen its balance sheet, and stabilise operations. 

The plan, supported by key lenders, creditors, and the Tasmanian Government, aims to enable the company to achieve cash-flow-positive and profitable production.

The agreement includes converting approximately A$67.2 million in debt and trade creditor obligations into equity, coupled with an additional A$23.75 million in funding from senior lenders. This funding will address operational inefficiencies and implement a comprehensive business transformation plan, focusing on upgrades to the processing plant and cost reductions.

The recapitalisation has received strong support from the company’s senior and subordinated lenders, PURE Asset Management Pty Ltd, Elphinstone Holdings Pty Ltd, Chrysalis Investments Pty Ltd (Ellis Family Trust), CRJE Maritime Pty Ltd, and Abex Limited.

Together, these entities hold the majority of the company’s A$82 million debt, with repayment extensions granted until February 28, 2025. Upon implementation of the plan, the lenders will collectively own approximately 87.6% of the company’s issued shares, with ownership increasing to around 97.02% post-recapitalisation, inclusive of creditor and equity conversions.

A $67.2 million in debt and creditor obligations will be converted into equity to deleverage the balance sheet. A$23.75 million in liquidity from senior lenders will finance critical operational upgrades and working capital.Up to 1.7 billion shares will be issued to raise A$5.94 million, with existing shareholders invited to participate in future offerings. Senior lenders will provide secured facilities totalling A$17.9 million.

G6M said in the company’s ASX announcement that the Tasmanian Government reaffirmed its support for the Dolphin Tungsten Mine,  the recapitalisation plan and recognised the project’s importance to King Island’s economy and the broader state’s development, as well as its role in Australia’s strategic supply of critical minerals.

The company said that the recapitalisation plan is the foundation for a comprehensive transformation of operations. Key initiatives include an optimised mine plan focussed on higher-grade ore and underground mining preparation; plant upgrades to improve throughput, recovery, and plant resilience; streamlining operations to lower production costs; and strengthening leadership with the appointment of Executive Chairman Kevin Pallas and other key roles.

Kevin Pallas has been appointed as Executive Chairman to oversee the transformation. He will be joined by Dale Elphinstone and Chris Ellis as Non-Executive Directors, with plans to appoint an independent director in the coming months. An executive search is underway for a new Chief Financial Officer.

An Extraordinary General Meeting (EGM) is scheduled for early 2025 as the recapitalisation requires regulatory and shareholder approval. Shareholders are encouraged to participate in the meeting, where they will have the opportunity to review and vote on the proposed resolutions. Existing shareholders, while facing dilution, will be offered the chance to participate in future equity offerings.

Mr. Pallas highlighted the importance of the recapitalisation, stating:
"This plan provides the financial stability and liquidity necessary to implement our transformation strategy. With lender and government support, we are now positioned to achieve the operational improvements needed to deliver a profitable future for Group 6 Metals."

Failure to adopt the plan, he noted, would likely result in insolvency and no return for existing shareholders.