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Mungana not happy with Kagara


17 October 2013
ASX Release,
By e-lodgement
In June of this year the board of Mungana Goldmines became increasingly concerned with the timeline of the possible outcomes from the Kagara Administration process. As a result several staff were made redundant, directors dropped their fees by 36% and other staff, including the Managing Director, voluntarily reduced their time by up to 50%. These initiatives were taken to preserve cash until the outcome of the Administration process became more predictable.
Mungana Goldmines has taken the view that because the North Queensland assets are stalled in the Kagara Administration process, the uncertainty resulting from the large shareholding now controlled by the administrator, the as yet unresolved stamp duty liability and the generally subdued equity market it is unlikely to be able to develop its gold assets in the short to medium term.
As part of the need to reduce operating costs the company also has reluctantly made the positions of Chief Executive Officer & Managing Director, Mr Pat Scott, General Manager Projects, Mr. Tom Cooney and General Manager Exploration, Dr. Adrian McArthur redundant. Mr. Ross Hutton, a non-executive director has also decided to resign to help reduce costs and to facilitate a smaller board more reflective of the company’s current state. The company thanks Mr. Hutton for his contributions as a director and his decision to stand down.
The company wishes to thank and acknowledge the efforts of Mr. Scott who was the company’s inaugural managing director. He assembled a first class team at Mungana and drove the acquisition of the South Australian gold projects of Tunkillia and Tarcoola. During the last 18 months he has operated under difficult circumstances due to the ongoing Administration of Kagara.
The aim of the board in taking these decisions is to ensure that Mungana has enough cash reserves to survive the Administration process and at 30 September the company had cash reserves of $3.4 million. The company is in discussions with the Office of State Revenue and believes that at the conclusion of the Administration process Mungana will be able to address this issue.
Mungana has great confidence in the merit of the gold projects it has assembled and which collectively host over 3.4 million ounces. Mungana looks forward to realising the value in these projects for our shareholders in a future free from the difficulties of Administration.
Yours Faithfully
J A Treacy
Chairman