ACT News

Unity Mining auditor warns on gold's risky outlook

Unity Mining is still looking for finance for its Majors Creek gold mine in a risky industry, writes John Thistleton.

An auditor's report for a mining company proposing a new gold venture near Braidwood says the business could face an uncertain future given reductions in its cash reserves, lower gold price and risks associated with its Tasmanian gold mine.

Unity Mining needs to raise $70 million to develop Dargues gold mine near Majors Creek, and is applying for NSW Government approval to process ore on site using cyanide, which has dismayed some people in the area and downstream in the Araluen Valley.

Mine expansion: Unity Mining needs to raise $70 million to develop Dargues gold mine near Majors Creek.
Mine expansion: Unity Mining needs to raise $70 million to develop Dargues gold mine near Majors Creek. 

In notes accompanying its financial statements for the 2014 financial year the company says it has enough cashflow for planned activities for at least 12 months, and can raise more money and scale back activities or sell assets if needed.

But its auditor says if unsuccessful in these measures, there is "material uncertainty whether the company and the consolidated entity will continue as a going concern and therefore whether they will realise their assets and discharge their liabilities in the normal course of business and at the amounts stated in the the financial report".

The auditor's report noted significant expenditure at Dargues, and poor operating performance at the Henty gold mine cut cash reserves.

Unity earlier this year suspended work at Dargues. At the Henty gold mine  Unity has cut costs, reviewed its production schedule and in July decided to recover higher margin reserves before ceasing mining operations at the end of 2015.


Unity chief executive Andrew McIlwain said the company had always acknowledged it had to raise money to develop Dargues. "It is not an issue of us being at risk of being insolvent by any means, and it is something our board attends to on a regular basis," he said.

"The gold industry and the project financing industry is changing at the moment. There are not many people spending  capital on projects, so the traditional debt financiers are looking at different things, and we are looking at different avenues by which we would fund the project, rather than potentially going to one of the key investment banks."

Mr McIlwain said Dargues was a key asset which Unity intended to use to build the company. Selling the project was highly unlikely, but taking on partners was not out of the question.

"Even if it is a debt facility you end up in a partner-type relationship because quite often debt providers will take some equity in your company as well," Mr McIlwain said.

He said they would leave no stone unturned in working out how to take the project forward, to make good on  providing prosperity in the district.

"I won't be a pig-headed to say there is only one way of doing that, if we have to become a partner with another entity in that project we would look at that."

Unity has chartered a plane and will take eight people from the Majors Creek area, including three members of a community consultative committee on a one-day tour of the Henty operation, to allow them to see an operating mine, what it looked and sounded like and to address concerns about cyanide use.