Updated as of 4pm AEDT (1pm AWST) with latest ASX statement issued today at 3.40pm AEDT.
KordaMentha’s dual-track equity recapitalisation and sale process for True North Copper (ASX:TNC) will start late this week with the process expected to take about two to three months, according to sources familiar with the situation.
The data room will be set up in the upcoming week and an information memorandum will be made available to interested parties.
On 21 October, Queensland-focused True North Copper appointed Richard Tucker and Tony Miskiewicz of KordaMentha as voluntary administrators.
KordaMentha is assessing the company’s operations and is seeking expressions of interest to acquire the group as a whole or individual projects/assets as part of the dual-track process.
Today (24 October) KordaMentha has given notice it intends to rely on the relief set out in a Australian Securities and Investments Commission (ASIC) corporations instrument, which provides for the deferral of financial reporting obligations for a minimum period of six months and up to a maximum period of 24 months from the date of its appointment.
The ASIC instrument also enables deferral of requirements to hold an AGM. The True North AGM will no longer be held on 31 October 2024 as previously scheduled.
In accordance with the instrument, the financial reporting obligations of True North under are deferred until the external administration ends prior to 21 April 2025 (inclusive), six months from the date of the appointment of the administrators; or if the external administration extends beyond 21 April 2025, the earlier of: a) 24 months from the date of the appointment of the administrators; b) if a deed administrator is appointed, the day on which a director has the right to, or is able to, perform or exercise all or most of the management powers or functions of a director under a deed of company arrangement or with the consent of the deed administrator; or c) the day the external administration of True North ends.
In a statement to the Australian Securities Exchange on 22 October, True North Copper says the decision has come after a period of extensive negotiations with its debt provider Nebari Natural Resources Credit Fund II, largest shareholder Tembo Capital Holdings UK, and other potential equity providers.
It also comes three weeks after CFO Craig Gouws resigned from the company for personal reasons. Gouws came on board as CFO in June 2024 at the same time as Bevan Jones was appointed as Managing Director to take over from Marty Costello who stepped down in May.
With cash resources running down and “no prospects of being able to draw on existing facilities or raise additional equity or debt” before the scheduled AGM, the administrators were appointed, as per True North’s ASX statement.
Mining.com.au reached out to True North Copper, which declined to comment beyond its statement to the ASX.
According to one source familiar with the situation, Nebari ultimately triggered the administration process and KordaMentha’s appointment.
It’s understood the debt provider called in breaches of some ‘onerous’ debt covenants and was unable to come to an agreement with True North’s largest shareholder Tembo Capital Holdings UK regarding an injection of funds from the latter that would help the company satisfy all conditions to draw down tranche two of the Nebari debt facility.
In February, True North Copper met all tranche one conditions precedent of the senior secured loan facility with Nebari to clear the way to draw down US$18 million. At the time of securing the debt facility in January, then Managing Director Marty Costello said the financing with Nebari marked a significant milestone for the company.
Then in May, the company announced a fully underwritten $24.3 million equity raising which was “strongly supported by key stakeholders, including Tembo Capital Management” – the company’s largest shareholder (32%) – and Nebari.
Mining.com.au understands by later seeking to draw down the US$10 million available in tranche two it triggered the aforementioned events and administration process as Nebari deemed True North Copper’s market capitalisation – then just under $30 million – as well as its levels of cash at hand dipping below a threshold, an ‘unacceptable risk’.
“The (voluntary administration) decision is regrettable especially as mining activities at Wallace North, part of the Cloncurry Copper Project, ramp up on schedule with the first oxide ore placed onto the heap leach pads at Cloncurry earlier this month,” True North said in its ASX statement.
“In addition, recent exploration at Mt Oxide partly funded by a CEI grant from the Queensland Government has identified a number of highly prospective targets for drilling with a high probability of making more discoveries like the Vero deposit.”
Meanwhile, in an announcement to the ASX yesterday (23 October), Critical Minerals Group (ASX:CMG) said the non-binding term sheet signed in December 2023 regarding entering into a farm-in agreement with True North Copper for its Figtree Pocket and Lorena Surrounds tenements is no longer in effect.
Critical Minerals will consider other partnering options to conduct exploration activities on the tenements and says it remains focused on developing its Lindfield Project and establishing a vanadium electrolyte demonstration plant in South East Queensland.
The appointment of KordaMentha is somewhat perplexing to many in the market as True North has been on track to become Australia’s next copper producer and critical metals supplier by Q1 2025 with the start of sulphide processing scheduled in the new year.
On 14 October, the company was ramping up operations at Cloncurry after mining more than 220,000 bank cubic metres since works began at the Wallace North deposit, as reported by this news service.
Sulphide ore from Cloncurry has already been transported to a nearby concentration for toll treatment under the company’s toll milling agreement with global commodity trader Glencore (LSE:GLEN). Transitional and sulphide ores were poised to be mined and stockpiled during this quarter with toll milling expected to begin in Q1 2025.
Based on the mining restart study announced in February 2024, Cloncurry is estimated to generate free cash flow of $200 million at current copper spot prices over its initial 4.6-year mine life.
The move to appoint administrators also comes just four months after major Australian resources investor Regal Funds Management increased its stake in True North Copper to 14.07%.
Regal, which manages more than $12 billion in funds, took a greater interest in June with the acquisition of a further 53.6 million shares for $3 million. The resources investor became a substantial shareholder earlier that month after picking up an initial 10.2% stake.
As mentioned, in May True North completed an entitlement offer and placement, raising $16.7 million for mining operations at its Cloncurry project.
The company’s largest shareholder Tembo Capital committed to participate up to $6 million. Tembo Capital at the time had a 32% shareholding on an undiluted basis.
True North’s debt provider Nebari Natural Resources Credit Fund II also committed to sub-underwrite the retail entitlement offer for up to $500,000, as reported by Mining.com.au.
Nebari has been reached out to for comment while KordaMentha declined to comment beyond True North’s ASX statement to the market.
Write to Adam Orlando at Mining.com.au
Images: True North
