Mirabela's future in doubt
Mirabela Nickel is bordering on the brink of collapse, with the Perth-based miner yesterday admitting it may need an administrator as it stares down the barrel of looming interest payments on almost half a billion dollars in debt.
In a company update released to the market yesterday, Mirabela, which defaulted on an $US17.3 million ($18.2 million) interest payment last month, said though it had enough money in the bank to make the payment, making it would impact on its ability to operate.
The company revealed it had burnt through $US54.3 million in the past four months and had about $US53.7 million left in the bank.
The one-time high flyer, which operates the big but low-grade Santa Rita nickel mine in Brazil, yesterday announced the appointment of Ferrier Hodgson as "financial advisers".
To avoid insolvency, Mirabela needs to negotiate standstill arrangements for the interest repayment by November 13 - the due date for the $US17.3 million instalment. If it fails it would default and Mirabela said an administrator would be considered to "protect the company's assets". Mirabela managing director Ian Purdy did not return calls from _WestBusiness _ while representatives from Ferrier Hodgson declined to comment.
In its update, Mirabela said it was "actively discussing" potential ways to restructure its debt to reduce the burden on the company with its key financiers.
However, the company labelled the process "complicated" and it is widely expected Mirabela will have to carry out a debt-for-equity deal that will hand company control to its lenders.
The company update came on the same day it released its quarterly report. It revealed Mirabela's production costs, when including overheads, were well above the sale price for nickel.
Mirabela admitted yesterday any debt restructure needed to be paired with a capital injection.
To add to the pain, Mirabela said yesterday a repayment of $US16.67 million to Brazilian banker Bradesco was due at the end of January, while another $10 million is owed to other finance lease facilities.
Mirabela's shares remain in voluntary suspension. It said it intended to update shareholders monthly on its situation.
Nickel, trading at $US6.62/lb yesterday, has been one of the worst performing metals over the past 12 months, and many analysts expect an equally dreary 2014.
