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Monto Minerals Ltd (ASX:MOO) Monto Minerals Limited ('Monto' or 'the Company')
Goondicum Project Operating and Financing Update
The Board of Monto Minerals Limited today announces its conclusions
following a detailed review of the Company's Goondicum Industrial
Minerals Project (the 'Project').
The Project, which commenced production in October 2007 has since
that time fallen well below targeted Stage 1 production targets,
culminating in an increase in the Company's working capital
requirements and the need for the Company to raise interim funding of
A$5 million via the issue of new ordinary shares as announced on 16
June 2008.
That funding was raised to enable the Company sufficient time to
conduct a detailed investigation into how the Project's limiting
factors might be overcome in order to achieve an acceptable return;
the viability of the Company's longer term expansion plans; and the
Company's likely additional funding requirements.
The key findings of the investigation included the following:
* While a number of actions have been taken with the aim of
improving plant availability and production rates, these actions
have been unsuccessful in achieving a significant increase in
production which remains well below the target set for Phase 1.
* A number of significant flaws in the design of the
Project's feed preparation area have been identified and it is
believed that these issues are the primary cause for the Project's
poor operating performance to date.
* The feed preparation area is currently only capable of
delivering to the remainder of the plant around half of the
material required to achieve the Phase 1 production target.
* The Company's mining and processing activities at current
levels of production are loss making and are likely to remain
uneconomic unless the Phase 2 production rate target, which is
double the Phase 1 production rate target, can be achieved
following an expansion.
* To achieve an economically viable level of production, a
redesign of the Project's feed preparation area is required as part
of a Phase 2 expansion.
* While further work by third party consultants is required
to determine the cost of a Phase 2 expansion and associated
redesign of the feed preparation area to an appropriate level of
accuracy, current estimates are that capital costs and working
capital requirements would exceed A$30 million.
* The economic returns of the Project are sensitive to a
number of factors including forward looking selling prices,
exchange rates and the level of demand for the Project's key
products, and in particular, the demand for the Company's Feldspar
production.
Having reached the conclusions set out above, the Board is concerned
that it might not be possible to fund the capital expenditure and
working capital required to achieve a Phase 2 expansion and redesign
of the feed preparation area through the equity capital markets.
The Company currently has limited cash resources and is in
discussions with a limited number of potential strategic investors to
meet its funding requirements. Those discussions will be finalised by
Friday 29 August 2008 at which time the market will be informed of
their outcome.
If interim funding is not secured by Friday 29 August 2008 then in
order to protect the interests of shareholders and other stakeholders
as a whole, the Board may place the Company into voluntary
administration. This would allow the Company to explore further
funding and sale opportunities whilst also managing its obligations
to creditors.
Trading in the Company's ordinary shares has today been suspended on
the AIM Market of the London Stock Exchange with immediate effected.
Trading in the Company's ordinary shares was today also halted on the
ASX.
Enquiries:
Peter Slaughter, Non-Executive Chairman - +61 407 803 354
Richard Brown, Ambrian Partners Limited - +44 (0) 20 7634 4700
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Monto Minerals Ltd
www.montominerals.com
ISIN: AU000000MOO0
Stock Identifier: AIMX.MON
