October 20, 2015, 6:21 am The domino effect from the collapse of...

October 20, 2015, 6:21 am

The domino effect from the collapse of the Ellendale diamond mine has taken its biggest victim so far, with the mine’s biggest creditor, owed $6.5 million, forced into liquidation.

The Supreme Court last week appointed liquidators to Consolidated Services, Ellendale’s haulage contractor. It is understood Consolidated collapsed owing more than $2 million to secured lenders and its own sub-contractors.
Its only major client was Ellendale’s operator, a subsidiary of ASX-listed Kimberley Diamonds, which sent the mine into administration in late June owing staff more than $5.3 million and trade creditors millions more.

Consolidated employed more than 20 workers at Ellendale before its closure. The family-owned company was appointed to the haulage contract only two months before Ellendale’s collapse, at a time when at least $1.5 million was still owed to its predecessor in the role, MACA Ltd.

Sources say Consolidated received only one payment under its 27-month contract with Ellendale before the mine abruptly closed.

It is understood its sub-contractors, which included a group of regional business that had previously worked with its family owners, tried to hold off acting against Consolidated in the hope a distribution from the sale of Ellendale’s assets could clear the bulk of its outstanding bills.

But uncertainty over the timing and amount of any payments from Ellendale’s own liquidators forced the appointment of RSM Bird Cameron to wind up Consolidated last week.

Ellendale’s liquidators, Jirsch Sutherland, told creditors last month the auction of plant and equipment had raised about $3 million. A package of about 26,000 carats worth of diamonds is still held in Perth, awaiting an export licence before it can be auctioned.

Most of Ellendale’s employees have received statutory payments from the Federal Government’s Fair Entitlement Guarantee scheme, and it is understood Jirsch Sutherland hopes to make further payments of superannuation and other entitlements not covered by the scheme.