King Island scheelite mine to undergo strategic review

GROUP 6 Metals Limited (G6M) has appointed MA Moelis to conduct a strategic review to identify its optimal capital structure and explore potential mergers and acquisitions to enhance its value proposition for shareholders. The strategic review aims to reposition the business, improve its financial standing, and identify opportunities for strategic partnerships with potential investors.

The move comes as the company annonuced it has secured additional funding from four of its senior lenders: Abex Limited, CJRE Maritime Pty Ltd, Elphinstone Holdings Pty Ltd, and Pure Asset Management Pty Ltd.

These lenders have agreed to increase the limits under the existing bridge facility agreements by $4 million and to extend the maturity dates of all near-term debt to align with the anticipated completion of the strategic review. The revised bridge facilities accrue interest at a flat rate of 12% per annum, payable monthly in arrears, with the total amount, including interest, repayable on November 22, 2024. These changes are contingent upon receiving shareholder approval at a General Meeting, expected to be held in late October 2024, and obtaining consents from existing lenders. 

The Company advised the ASX that it is implementing cost-reduction strategies to lower operating costs while increasing production output. Recent initiatives reported in the June 24 Quarterly Activities Report include the rationalisation of the mining fleet, with two 777 trucks already demobilised and the remaining two set to be removed in the coming months. A 150-tonne excavator will also be demobilised. 

In addition, the Company will soon commence trials of night-shift mining operations. which are expected to enhance equipment utilisation and significantly boost productivity.

Managing Director and CEO of Group 6 Metals Keith McKnight stated: “The appointment of MA Moelis Australia comes at a pivotal time for the Company. A successful recapitalisation and strategic investment will underpin our plant optimisation plan, cost reduction efforts, and growth initiatives like ore sorting, ultimately accelerating our path to cashflow-positive operations.”

Johann Jacobs, Chairman of Group 6 Metals, added: “We are grateful for the continued support of our senior lending group as we undertake this important strategic and operational review. This process presents an opportunity to create substantial value for all stakeholders and position the Company for long-term success.”

MA Moelis was also last year appointed by Saputo to undertake the strategic review of King Island Dairy.