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Business |
Highlands Pacific in shock K337m
H1 loss
Auditor questions company’s ability to
survive as ‘a going concern’
By BRIAN GOMEZ in Sydney
HIGHLANDS Pacific
has stunned the market with a total loss of US$113.9 million
(K337 million) in the half year to June 30, with fears expressed
whether it can “continue as a going concern”.
Its interim report said yesterday Highlands Pacific suffered an
operational loss at the Kainantu gold mine of US$16.2 million
(K47.9 million) and the company now has a net liability of
US$31.8 million (K94.1 million).
It has also booked a non-cash impairment charge of US$64.3
million (K190.3 million) with the loss on cash flow hedges and
discontinuance of hedge accounting resulting in an additional
loss of US$32.9 million (K97.4 million) for an overall loss of
US$114 million.
Auditor PricewaterhouseCoopers said “there is significant
uncertainty whether the group will be able to continue as a
going concern and whether it will realise its assets and
extinguish its liabilities in the normal course of business”.
Following the release of the interim results, Highlands Pacific
share price dropped by A$0.03 or 18.75% to A$0.13 on the
Australian Stock Exchange.
Directors said the “very disappointing results” reflected the
poor performance at the Kainantu gold mine.
The new Kainantu management team was making progress, having
achieved substantially higher mill throughput and gold
concentrate grades but the critical low mine grade “remains at
previous levels.
“Whist the primary focus is firmly set on improving the
performance at Kainantu, the group is progressing the divestment
of its interest in the Ramu nickel and cobalt project.”
Directors said the group’s banks continued to support management
efforts to improve the performance at Kainantu.
Directors said the proposed Ramu nickel sale announced in July
should be completed by the end of this year.
“The project is carried on the books at US$16 million (K48.78
million),” they said.
Last Aug 1, the group’s banking syndicate agreed to defer loan
repayments due in August and November of US$2.5 million (K7.6
million) each to December and February next year and forward
gold sales for 12,000 ounces due Sept 30 and 17,539 ounces due
Dec 31 have been deferred to Feb 29 next year.
Highlands Pacific was committed to deliver 99,693 ounces next
year and 70,154 ounces in both 2009 and 2010 at a price of
US$400 (K1,219.51) an ounce for a total hedge book of 240,000
ounces.
They said the group was developing a new life of mine plan and
would look at the possibility of restructuring its debt
facilities and forward sales contracts to align them to expected
future gold production and sales.
“At this stage, it is not possible to forecast with any
certainty the mine’s production performance and the proceeds of
the sale of the Ramu interests.
“As a result, there is material uncertainty whether the group
will continue as a going concern and therefore whether the group
will realise its assets and settle its liabilities and
commitments in the normal course of business.”
 
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