Wiluna Group - Case Update

Michael Ryan, Kathryn Warwick, Ian Francis and Daniel Woodhouse of FTI have given an update on their administration of the Wiluna Group (ASX:WMC), a Perth-based junior gold miner that entered voluntary administration on 20 July, 2022. The appointment was referred to FTI by a Wiluna director who knew FTI from the administration of another mining company of which he was a director. Wiluna’s management had been working on a plan to take advantage of the 5.5 million ounce gold resource at the company’s mine in Western Australia, but due to the increasing cost pressures, the impact of COVID-19 on staff availability, project ramp up issues and worldwide shipping constraints, there was insufficient working capital to complete the development. Capital raises attempted prior to the administration were insufficient. Upon its appointment, FTI chose to continue trading the gold mine instead of placing it on care and maintenance. They have been able to generate sufficient cash to cover operational costs as well as repay USD $1 million of secured debt and A $1.6 million of outstanding employee entitlements. FTI, assisted by corporate advisor amicaa, also ran a dual track sale and recapitalisation process that ultimately was unsuccessful, with potential purchasers wary of the large and uncertain additional expenditures still required for the project. FTI then turned its attention to formulating a DOCA that strengthens the company’s balance sheet and improves its ability raise further capital. The DOCA will see unsecured creditors receive a dividend of approximately 5 cents in the dollar and participate in future cashflows, up to a cap of $39 million, generated by Wiluna should it be successfully recapitalised. The DOCA was approved on 10 July. Full report.