December 19, 2007
MELBOURNE-BASED Philippine miner Lafayette has gone into administration after a $US150 million ($A175 million) rescue package spearheaded by a Malaysian-backed private equity fund fell over.
Lafayette's Rapu Rapu base and precious metals mine on an island in the Philippines of the same name was meant to be a flagship operation for the country, which has been wooing foreign investment despite fierce opposition from non-government organisations.
But a combination of tailings spills, bad hedges and damage from "super" typhoons has seen Rapu Rapu, 74% owned by Lafayette, struggle since production started in 2005.
Lafayette raised hopes that it might be able to work through its problems earlier this year when it revealed shareholders could end up owning as little as 9% of the company under a conditional rescue package proposed by South-East Asian Strategic Assets Fund (SEASAF), a private equity fund created by Malaysian investment bank CIMB and Standard Bank plc last year.
The package would have tackled Lafayette's crippling debt ($158 million) and hedge liabilities ($154 million). But in a statement yesterday, Lafayette said the rescue package had failed for various reasons, as had an alternative plan involving SEASAF and a "new group of financial investors".
As a result, Lafayette has appointed Rod Sutton and Peter McCluskey of Ferrier Hodgson as administrators. Options for the administrators include the sale of Rapu Rapu or a new restructure and recapitalisation proposal.
Rapu Rapu cost $58 million to develop. It was based on an eight-year mine life, with planned annual production of 10,000 tonnes of copper, 14,000 tonnes of zinc, 50,000 ounces of gold and 600,000 ounces of silver. After delays caused by tailings spills and typhoon damage, the plant at Rapu Rapu continued to ramp up to design capacity in the September quarter. But Lafayette was banking on its recapitalisation to provide funding for project improvements.
In the September quarter production was 878 tonnes of copper, 1705 tonnes of zinc, 1522 ounces of gold and 38,525 ounces of silver. Lafayette shares last traded at 1.5¢.