QUEENSLAND copper miner CopperCo fell into administration due to its inability to reimburse Swiss commodities trader Glencore after a plunge in the copper price, rather than a looming $US45 million ($60 million) debt repayment to Macquarie Bank.
The receiver appointed by Macquarie, Darren Weaver, of Ferrier Hodgson, said yesterday CopperCo's board took the decision to appoint an administrator after it was left with too little working capital to survive.
Rival miner Matrix Metals - a higher-cost producer - entered administration for the same reason last month.
"There were provisional pricing issues and also a requirement for additional working capital to meet the costs of [CopperCo's mine] expansion," Mr Weaver told the Herald. "The mine is operating as normal under our control as receivers and managers."
In its last days of trading it is believed CopperCo had so little cash on hand that it was unable to maintain adequate fuel supplies.
Two-thirds of CopperCo's output was hedged at prices higher than the spot price, and its operating costs were $US1.08 a pound - profitable even at today's levels.
"Just a month before they gave no hint they were running out of cash," said a Fat Prophets analyst, Gavin Wendt. "Everything was going swimmingly. That is the staggering thing."
CopperCo's board has faced investor criticism for merging with its largest shareholder, listed mining investment group Mineral Securities, which brought with it stakes in listed miners and $US45 million of debt repayable by December 31.
But Mr Weaver said the core CopperCo assets were the trigger for appointing administrators, rather than the MinSec assets.
Macquarie, which was also a major lender to CopperCo, has security over the CopperCo and MinSec assets - including CopperCo's valuable hedgebook.
"There is a lot of interest around the assets, the copper assets particularly," Mr Weaver said. He said it was too early to tell whether CopperCo shareholders could expect to see any returns.
