View Comments
The Meekatharra gold project. Picture: The Kalgoorlie Miner.
The Meekatharra gold project. Picture: The Kalgoorlie Miner.

UPDATE 1.20pm: Administrators for Reed Resources' Meekatharra gold project have been forced back to the drawing board after a preferred bidder for the asset had its financing pulled.

Ferrier Hodgson had agreed to terms with the unnamed preferred bidder for the sale of GMK Exploration, a Reed subsidiary which holds the Meekatharra asset, before the deal was torpedoed.

"As a result, the administrators are now canvassing the other bidders in the sale process as well as new interested parties with a view to determining a replacement transaction for the benefit of creditors," Reed said in a statement today.

A meeting of creditors will be held to agree on giving the administrators more time to sell the asset.

Administrators expect creditors will realise a significant dividend from the sale of the asset, albeit unlikely to be 100 cents in the dollar.

However Reed said it had decided to write down the value of a $25 million loan to GMK to zero. The company would also take a $1 million hit on the $3 million carrying value of Comet Vale project, which it announced it had sold yesterday for $2 million.

The anticipated asset impairment charges are non-cash in nature, it said.

Reed said it held $10.1 million (unaudited) in cash at the end of December, including $6.2 million in restricted use term deposits.

Reed expects to post its full, audited first-half accounts on March 14.

Shares in the company were up 0.1 cents, or 1.92 per cent, to 5.3 cents at the close.