Uncertainty for island mine's future

KING Islanders have keenly followed the fortunes and promise of the reborn Dolphin Tungsten Mine since works began in early 2021.

That promise now looks in doubt as mining company Group Six Metals fights for its survival.

G6M is facing a cash-flow crisis and the company seeks to recapitalise.

G6M late last week requested an immediate voluntary suspension of its securities from trading on the Australian Securities Exchange.

The company said the suspension was due to ongoing negotiations related to recapitalisation efforts.

Negotiations address critical financial difficulties and could include a significant cash injection.

“Unfortunately, we are unable to comment further other than what is stated in the announcement,” G6M managinbg director and chief executive officer Keith McKnight said.

State Business, Industry and Resources Minister Eric Abetz questioned why the mine had not received any federal government support to date.

 “The mine is a key asset for national supply security,” he said. “The state government remains strongly committed to the King Island Dolphin Tungsten Mine.

“The negotiations surrounding Group 6 Metals’ financial position are commercial matters, however we continue to work closely with stakeholders.

“We await the outcome of the strategic review expected in the coming months, which will help guide the direction of the mine’s operations.” 

G6M also advised the ASX that the release of the company’s annual financial report for the year ended June 30, 2024 will be delayed due to these discussions. 

G6M believes that continued trading of its securities during this period would result in the market trading on an uninformed basis. 

The suspension will remain in place until either October 31 or the release of a market announcement regarding the recapitalisation.

G6M expects to provide an update before trading resumes. G6M’s four senior lenders provided $4m additional credit to align with the expected timing of the conclusion of a strategic review by MA Moelis.

The company experienced increasing cash flow issues over the past two years, and these problems were felt by local King Island small businesses earlier this year.

Some had no option but to withdraw products and services and cut off credit accounts. This was eventually remedied by the company and larger suppliers introduced conditional payment schedules.

The Dolphin Tungsten Mine’s recent cost-reduction activities include rationalising and demobilising the mining fleet, despite positive exploration results reports and improved production levels in ore quality and quantities.

“I know I speak on behalf of all King Islanders extending our backing and support to the G6M Grassy Mine through this current challenging period,” Mayor Marcus Blackie said.

“We remain fully supportive and optimistic that their future viability will be strong after this current corporate review,” he said.

“Our tungsten remains in high demand for export and is priced accordingly, we all want mining to be a big part of our future King Island economy that will also help drive better shipping solutions as well as continue the rejuvenation of our iconic Grassy township,” Mr Blackie said.