deed administrators update to shareholders, page-16

Monarch goes, but Kiernan link stays


* Jamie Freed
* October 7, 2008
*

FIRST it was Territory Resources and India Resources - both formerly linked to the Perth resources identity Michael Kiernan - that were propping up ailing miner Monarch Gold.

Now Monarch is in administration, the former Kiernan miners have had their investment losses covered by loans from another of his business associates.

An examination of financial accounts shows the Hong Kong-listed commodities trader Noble Group - Mr Kiernan's partner in an unlisted investment vehicle, Crawley Resources - has loaned more than $45 million to Territory and India since February. Territory and India last week took $47 million impairment charges on funds invested in Monarch and other companies linked to Mr Kiernan.

Territory reported advances of more than $44 million from Noble between February and May, and still owed the commodities trader $27 million as of June 30. Territory's loans from Noble roughly equal the $43.8 million in impairments it declared following the failed investment strategy under Mr Kiernan's guidance. Including funds from the advances, Territory had a cash balance of only $1.9 million as of June 30, although its Frances Creek iron ore mine in the Northern Territory is now operating profitably.

Territory needs more than $20 million in new funding to expand its iron ore mine. It is trying to get finance on commercial terms, but Noble has offered funding if the terms are not deemed acceptable to Territory. Noble markets all of Territory's iron ore.

India, which has yet to report positive cashflows from its Surda copper mine, had $1.3 million cash as of June 30 after reporting $3.25 million of impairments. On September 5 India secured a $1.5 million working capital facility from Noble and had drawn down $500,000 as of last week.

Crawley has a stake in Territory and India. Noble's chief executive, Richard Elman, is a director of Territory and Crawley. Andrew Simpson, chairman of Territory and India, had been a director of Crawley with Mr Kiernan and Mr Elman, but quit in June after Monarch entered administration.

Mr Kiernan is attempting to re-enter the mining sector via the Sydney investment company Alexanders Securities, which could include buying some assets from Monarch's administrators.

Alexanders' shareholders will vote on a proposal next week under which Mr Kiernan and his son would buy a controlling stake of cut-price shares and options and then change the company's focus to mining.