Mining company Kagara has been placed in voluntary administration after reportedly failing to reach a new finance agreement, leaving more than 300 jobs at risk.
The move comes just a day after official ASIC figures showed the number of businesses entering external administration reached a record high in February.
The company – which mainly deals in zinc-lead and nickel – was founded in 1981 to explore for gemstones and tantalite. Over the past three decades, Kagara has expanded its interests to gold, orebody and nickel. In 2006, it once again expanded to search Queensland for copper concentrates.
The company, which recorded revenue of $130 million in the first half of the year, said yesterday that Michael Ryan, Mark Englebert, Stefan Dopking and Quentin Olde of Taylor Woodings were appointed to the company as voluntary administrators.
About 325 workers are employed by the company. Their jobs are in jeopardy as the company considers its next move.
“In the case of Kagara, the voluntary administration process will provide the company and its stakeholders with the necessary breathing space and protections to make the decisions about the future of the company in a considered way,” Ryan said.
“As administrators, we will work closely with the management team to identify all potential options and opportunities available to Kagara, including options relating to a potential re-capitalisation of the company.”
The Australian has reported the Perth-based company could not refinance a $40 million debt facility with ANZ. Ryan told the publication there will be further redundancies this week.
The administrators were contacted this morning, but a reply was not available prior to publication.
The company maintains a 62% stake in Mungana Goldmines, which said in a statement to the market that it would continue trading as usual.
Kagara has faced financial issues for some time. During the 2010-11 year, it reported a net loss after tax of $32.2 million, following a “significant period of change and repositioning”. It faced impairment charges of several million dollars due to writedowns in two underground mines.
Just last month, the company announced that it would need to seek financial assistance or obtain funds from selling assets. In that same report, the company announced a net loss of $48.9 million and last week the company announced it would suspend mining in two separate facilities.