Kiernan pressures Territory to save Monarch26th June 2008, 8:00...

Kiernan pressures Territory to save Monarch

26th June 2008, 8:00 WST

Michael Kiernan warned last night he would put administrators into Monarch Gold Mining by the end of the week if the struggling miner’s biggest shareholder, Territory Resources, refused to provide a financial lifeline.

The warning came as Mr Kiernan confirmed his resignation as Territory chairman after a clash with fellow directors over future funding support for the Kiernan-chaired Monarch.

It is understood Territory’s remaining directors had become increasingly concerned at the amount of money being invested in Monarch to prop up the struggling gold miner.

Andrew Simpson, who replaced Mr Kiernan as chairman and hinted Territory was “extremely unlikely” to invest more money, modified his view last night saying any further funding would depend on an independent expert’s advice, which had been sought.

In addition to owning 19.9 per cent of Monarch, Territory is also owed about $18 million. If Monarch collapses, Territory would struggle to recoup its equity and debt, raising the prospect of it caving in to Mr Kiernan’s call for a bridging loan.

Monarch’s shares are suspended but Territory’s stock, which has been depressed because of its Monarch ties, soared 14 per cent to 82¢. Investor sentiment was also buoyed by news Richard Elman, founder of Territory’s biggest shareholder, Noble Group, had joined the board as a nonexecutive director. The appointment quashes concerns about the future of Noble’s 27.5 per cent Territory stake given Mr Elman’s long-standing association with Mr Kiernan.

Mr Kiernan said last night Monarch needed $4 million to tide it over for the next two months while it tried to raise fresh capital, swing its fledgling Mt Ida mine into profit and sell the troublesome Davyhurst asset.

He said the money was required by the end of this week or “we as Monarch directors will have no alternative but to call in administrators”.

“It’s quite clear without the oxygen from Territory that there’s no funding in the short term to pay our (trade and employee) creditors,” he said.

Mr Kiernan’s resignation from Territory, which under his chairmanship became a profitable iron ore miner, ends his ambition to build a diversified mining house. Citing the need to focus on Monarch, Mr Kiernan yesterday also quit the boards of India Resources and Matilda Minerals but dismissed suggestions health issues, which have dogged him this year, played a part.

PETER KLINGER

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