battle to save monarch gold

Battle to save Monarch Gold continues

Administrators for collapsed gold miner Monarch Gold Mining Company Ltd remain hopeful the company can enter into a final deed of company arrangement (DOCA) and stave off insolvency.

Monarch's board placed the company into administration last month after closing its loss-making Davyhurst mine in Western Australia.

Among its creditors is its largest shareholder, iron ore miner Territory Resources Ltd, which refused to continue propping up the ailing company with loan facilities.

Bryan Hughes of administrators Pitcher Partners told AAP after a creditors' meetings in Perth on Monday that Territory was owed about $24 million and external creditors related to the Davyhurst operation were owed about $12 million.

Mr Hughes said creditors had approved on Monday an interim or 'holding' DOCA and may in due course consider a final DOCA proposal.

A holding DOCA keeps insolvent companies out of liquidation while decisions are made as to whether they should be reorganised and recapitalised, or assets sold.

Mr Hughes said interest for Monarch's assets, including the Mt Ida mine near Davyhurst that closed on August 1, was fair.

"Usually with these things, about 60 to 70 interested parties come out of the woodwork and half a dozen might have the capacity to complete a transaction," Mr Hughes said.

He said Mt Ida was within "truckable distance" to Davyhurst, so these operations may be best revived in tandem.

"One million ounces have been pulled out of Davyhurst, so it's clearly a gold-rich region."

Monarch announced in April that it had agreed to terms for the sale of its Minjar project in WA to Aard Metals and Energy Ltd, but Mr Hughes said a formal sale agreement was never executed.

He noted the "huge escalation in the resource sector's cost base", which countered high gold prices, squeezing margins.

Mr Hughes said some industry observers recently tipped a $US1,500 an ounce gold price, which revealed some significant pessimism about economies - especially the United States - because gold was traditionally sought as a hedge against inflation.