Failure to pay pushes Mirabela into mire

Nick Evans and Peter Klinger
Mirabela Nickel's Santa Rita mine in Brazil.

Mirabela Nickel has slumped deeper into the mire, confirming yesterday it had failed to make an October 15 interest payment on its $US395 million ($409 million) of bonds.

The Perth company said it had 30 days to make the payment to its bondholders or risk a default on the senior unsecured notes.

Mirabela did not say how much it was required to pay under the 8.75 per cent notes. But its 2012 annual report disclosure shows Mirabela made two interest payments of $US17.3 million each in April and October.

According to its most recent financial report, Mirabela held $US108.1 million cash at June 30. But that came after it burned through $US21.7 million in three months leading up to June 30.

Mirabela's accounts showed current liabilities relating to its debts of $US26 million, excluding interest payments on its unsecured notes, including $US8.4 million owed under a Caterpillar finance lease facility, $US16.7 million payable to Brazilian banker Bradesco in January and $US1.4 million due under an Atlas Copco finance lease facility.

Mirabela's shares remain in voluntary suspension while its management tries to work out a survival plan.

At its last share price trade of 1.6¢, one-time market darling Mirabela was worth just $14 million.

The company's problem is that its big but low-grade Santa Rita nickel mine in Brazil is not making money, at the same time as Mirabela is struggling not to suffocate under its huge debt load.

Adding to those woes, Mirabela shocked investors early this month with news that customer Votorantim Group was mothballing its smelter and therefore terminating an offtake deal with Santa Rita more than a year early.

Mirabela has since forced a partial backdown by its dominant Brazilian customer, though this has not alleviated the company's dire financial straits.

The nickel price has been one of the worst performing of the metals and many analysts expect an equally bleak 2014 as China ramps up pig iron output.

It is widely expected Mirabela will have to carry out a debt-for-equity deal that will hand company control to its lenders. There also remains the chance Mirabela will shut Santa Rita, one of the biggest nickel mines to come on stream in the past decade. Mirabela is expected to update investors by next week.