UPDATE 1.30pm: Reed Resources shares have lost half their value after the company announced big asset writedowns, the departure of chief executive Luke Tonkin and a restructure of its business, focussing on cutting costs and preserving capital.
Reed returned from suspension today to announce its chief executive Luke Tonkin will leave Reed Resources at the end of next month as part of a major board, management and operational shake-up at the company.
The company, which placed its flagship Meekatharra gold project in administration earlier this month, also announced it would book a $70 million non-cash charge on asset impairments in its 2012-13 full-year results mainly because of the lower gold price.
The impairments include $62.3 million on the Meekatharra project, $3.3 million on the Comet Vale gold project, $3.3 million on the Mt Finnerty iron and nickel project and $400,000 on the Barrambie project.
In an update to investors, chairman David Reed said son Chris Reed would resume the role of managing director and chief executive “on a scaled back remuneration basis”.
He would take a 30 per cent salary cut to $295,000 with his discretionary annual bonus capped at 50 per cent of annual salary.
Reed would also target a 50 per cent reduction in management staffing levels and a 50 per cent reduction in head office costs as it looked to scale back its business and shore-up its balance sheet in the lower commodity price environment.
“Operationally, Reed will now focus on disciplined evaluation and development of its two remaining core assets (Australian Vanadium Corporation and Reed industrial Minerals), and seek to divest itself of its non-core assets to strengthen its balance sheet,” Mr (David) Reed said.
“Reed will scale down its organisational and cost profile, commencing with a material restructure and reduction to its board and management teams that will be leaner and fit for future activities.”
The company's board would be reduced to one executive director and three non-executive directors, including the chairman.
“This will be coupled with a significant voluntary reduction in directors’ fees (30 per cent),” Mr Reed said.
Mr Reed said he would personally provide a standby facility of up to $3 million to underwrite the sustainability of the company over the next 12 months.
Last week, Mr Reed said management was working hard with administrator Ferrier Hodgson to turn around the fortunes of the Meekatharra gold project in the hope of reclaiming it.
Shares in the company were off 2.5 cents, or 51 per cent, to 2.4 cents at 1.30pm.