Hopes lift as buyers circle Kagara assets by: Paul Garvey From:...

Hopes lift as buyers circle Kagara assets

by: Paul Garvey
From: The Wall Street Journal
October 17, 201212:00AM

THERE may still be a future for one-time mining high flyer Kagara, writes The Australian's Paul Garvey.

The base metals miner went into administration back in April, when it was crippled by the unwelcome combination of high operating costs and falling commodity prices.

But efforts by Kagara's administrator, Taylor Woodings, and advisers at PCF Capital and Rothschild Australia to sell off the company's old assets are looking increasingly likely to bear fruit.

Today is the closing date for bids for Kagara's north Queensland copper and zinc assets and the big but undeveloped Admiral Bay lead-zinc-silver deposit in northern Western Australia. The Australian understands that the north Queensland assets have already received strong interest from a number of Australian, Chinese and other international companies interested in adding mining assets that are more or less ready for an immediate restart of production.

There is also believed to have been plenty of interest shown in Kagara's 60.7 per cent stake in listed gold play Mungana Goldmines, which is worth about $36 million at current prices.

Admiral Bay is something of a tougher sell, given it is an exploration project that requires significant up-front investment, but any companies with a positive view on the long-term outlook for zinc are bound to be interested.

The level of interest shown so far has left those close to the process increasingly confident that the roughly $100m Kagara is said to owe creditors can be retired and the company can emerge from administration in some form. The north Queensland assets alone could fetch enough to comfortably retire those debts.

Kagara was at its peak worth in excess of $1 billion.