question about pitcher partners august update, page-29

some incidental news, not that it helps MON holders, but some update on the ways in which things were handled...

http://www.thewest.com.au/default.aspx?MenuID=3&ContentID=92179

Territory claim in jeopardy
18th August 2008, 8:30 WST

The administrators of Michael Kiernan’s collapsed producer Monarch Gold Mining have thrown into doubt Territory Resources’ hope of being treated as a secured creditor because of an administrative breach.

Administrators Bryan Hughes and Chris Munday, of Pitcher Partners, have told creditors there were inconsistencies with how Territory registered its charge against Monarch’s Minjar gold asset.

They said the inconsistencies related to Territory registering a charge against Monarch over Minjar, even though Minjar was “legally and beneficially” owned by Minjar Gold Pty Ltd and not Monarch.

“Our preliminary view is that the charge, whilst technically valid, does not charge any assets of (Monarch),” the administrators wrote in their latest creditors update.

“Accordingly, we have shown Territory’s full debt as an unsecured claim against the company.

“If it becomes necessary to do so, we will seek further legal advice on the relevant issues.”

The finding by the administrators is a big blow to Territory, which as well as being Monarch’s biggest creditor is also its biggest shareholder. As a secured creditor Territory had hoped to regain much, if not all, of its $24.5 million in outstanding debts because of its priority status ahead of a looming sale of Monarch’s assets.

However, as a non-secured creditor Territory will be treated equally to others owed money by Monarch, including India Resources ($3.5 million), Mr Kiernan ($1.75 million), trade creditors ($884,309) and the tax office ($293,480).

Creditors will discuss the administrators’ findings at their meeting next Monday, at which they will also be asked to give Mr Hughes and Mr Munday more time to conclude investigations into Monarch’s affairs and conduct the sales process.

The administrators said their proposal would enhance the chances of a reasonable recovery for creditors compared to the other option of placing Monarch into liquidation.

In a boost to Mr Kiernan’s battered reputation, the administrators found no need to further probe suggestions that Monarch had failed to keep proper accounting records or that directors had not acted in good faith.

However, the administrators will spend more time assessing whether Monarch’s directors had failed to exercise a reasonable degree of care and diligence, and whether the board had incurred debts while insolvent.

Monarch’s collapse five weeks ago, in the midst of the biggest resources boom experienced in WA in decades, forced the spotlight on the State’s gold mining sector, which has been grappling with soaring operating costs and inconsistent ore bodies.

To add to the woes, the gold price has fallen sharply to below $US800 an ounce — it closed at $US792.10/oz on Friday, near a 10-month low — while short-sellers have played havoc with the share prices of several WA gold stocks. The list of woe includes a huge shortfall suffered by St Barbara during its $120 million capital raising, big cost blow-outs threatening the viability of the Super Pit in Kalgoorlie-Boulder, and a decision by Crescent Gold to close its Laverton gold project because of mill problems.

PETER KLINGER
Edited by SEAN SMITH