The future of around 200 workers is in doubt after falling iron ore prices forced the owners of the Cairn Hill mine in South Australia to appoint an administrator.
In a statement to the Australian Securities Exchange this morning, IMX Resources said that mine owner Termite Resources NL – in which IMX has a 51 per cent interest – had appointed Martin Lewis of Ferrier Hodgson as administrator.
InDaily reported yesterday that IMX had gone into a trading halt pending an announcement, with workers told on Tuesday that the mine, near Coober Pedy, was closing. Most are believed to have already left the site.
IMX managing director Gary Sutherland confirmed today that mining had stopped at Cairn Hill.
“When the administrators arrived the first thing they were keen to do was to stop spending money … it’s completely in the hands of the administrator in terms of the way forward,” he told InDaily.
Sutherland said the mine operation employed about 200 workers in total.
He said the decision to appoint an administrator was directly related to the fall in iron ore prices, which have dropped more than 30 per cent since the start of April.
Prices have fallen to 2012 levels of around $US89 per tonne, resulting in a fall in shares in Australian iron ore miners and apprehension in the industry.
“I don’t think anyone in the iron ore business could have predicted that,” Sutherland said.
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In April this year, IMX had announced it planned to extend Cairn Hill operations through to mid-2015.
In its statement to the ASX today, IMX said: “All contractual liabilities for the Cairn Hill mine are the obligation of Termite except for a guarantee provided by IMX under the port handling services contract with Flinders Ports Pty Ltd, in respect of any liabilities under that contract which have not been satisfied by Termite.
“This guarantee is capped at $3 million. IMX has held preliminary discussions with Flinders Ports and is confident that a mutually acceptable solution can be reached, should there be any claim under the guarantee.”
It said the decision regarding Cairn Hill would have no impact on the exploration programs currently underway at IMX’s Ntaka Hill nickel sulphide project or its Kishugu gold prospect in south-east Tanzania.
