Junior copper/gold producer Selwyn Mines Ltd has been placed in receivership after a meeting with Bank of Western Australia on Monday.
BankWest said it had appointed Garry Trevor and Peter Geroff of Ferrier Hodgson as receivers and managers of Selwyn Mines Ltd.
The bank said the move was the result of a delay in expansion operations and the failure of the company to complete a rights issue to raise $12.7 million for its copper and gold mine about 150km from Mt Isa in north west Queensland.
In a statement released after close of trade today Selwyn said that without the bank's assistant it would have to call in administrators.
Selwyn company secretary Graeme Hogan said the mining company had placed a proposal before BankWest and Glencore which would allow it to keep operating the mine while putting together a recapitalisation plan.
The bank rejected the proposal.
"BankWest has indicated that it will not release funds from the company's escrow account or proceeds from the sale of product to be used to pay creditors," Mr Hogan said.
"As a result the board is of the opinion that the company is insolvent or is likely to become insolvent in the future and that the company seek to appoint an administrator."
He said Selwyn had indicated its position to BankWest, which then notified it that a receiver had been appointed and was now in possession of the company's assets.
Sydney-based Selwyn Mines was first listed in June, 2000.
It acquired the Selwyn project near Mt Isa from the receivers of Australian Resources Ltd.
In September this year Selwyn booked a 77 per cent slide in net profit for 2001/02 to $1.2 million.
Selwyn managing director William Howe attributed the dive to higher operating costs associated with its $15 million mine and plant upgrade.
Later that month it announced a $14.75 million, three-year offtake agreement with Swiss commodities house Glencore International, which it said would strengthen its expansion program.
Repayments were to be paid from the proceeds of each Selwyn copper-gold concentrate shipment throughout the length of the contract.
Selwyn shares closed at 22.5¢ today.
SLN Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
