The future of the Springsure Creek coal mine in Central Queensland looks very shaky with the announcement late yesterday that the project proponent, Bandanna Energy, has gone into voluntary administration.
The controversial underground long wall coal mine was earmarked for a site 47 kilometres south east of Emerald in a fertile area classed as strategic cropping land.
After extensive and long ranging negotiation with concerned owners of neighbouring farms, the project received approval from the federal government in June of this year and was set to proceed.
However, according to the ABC, Bananna Energy has told the Australian Stock Exchange that the lengthy negotiations placed a heavy financial burden on the project and the company has been in discussion with Credit Suisse AG since federal approval was received.
“Bandanna, on behalf of the BND Group, has worked constructively with Credit Suisse and numerous proposals to extend the SSGFA (Senior Secured Guarantee Facility Agreement) have been discussed,” the company said in an ASX announcement.
“During this time, Bandanna vigorously explored alternative funding sources, including from Credit Suisse, existing and potential new major equity investors and also explored opportunities for binding commitments to asset sales.
“Negotiations with Credit Suisse have been both extensive and cordial however the Board, after significant deliberations, determined by majority decision that an agreement with Credit Suisse could not be reached.
“With no direct improvement in Bandanna’s financial position and with limited ability to raise additional funds to progress the grant of the mining lease, the Board formed the view that Bandanna was not able to continue as a going concern.”
Around 500 operational jobs and 350 jobs during the construction period were expected to be created by the project.
Bandanna chairman John Pegler says the company had made substantial progress towards the development of the Springsure Creek project, including State and Federal environmental approvals and “broad support from the local community and Local Government.”
“Unfortunately, progress has been impacted by delayed approval of the Springsure Creek mining lease and the deepening cyclical decline in seaborne thermal coal prices, which together have further exacerbated delays in investor interest and participation,” Mr Pegler says.
With the price of thermal coal at record lows, it’s yet to be seen whether the company will be able to sell the mining lease applications to a third party.
Grant Sparks, Phil Carter and Martin Ford of PPB Advisory have been appointed as Administrators of the company, effective yesterday (22 September 2014).