Trading in shares in Van Dieman Mines plc on the London AIM market were suspended on 24 February and the company announced yesterday that its Australian operating subsidiary Van Dieman Mines Pty Ltd is to go into voluntary administration. The decision follows further problems with the start up of the Scotia tin project in Tasmania and the refusal of major stakeholder Galena Special Situations Master Fund to advance a further A$2.62 million to cover the completion of a trial mining programme.
In a statement VDM said it “has concluded that the Scotia project is unlikely to be cash positive at the present tin price. The changes in the Scotia project forecasts are due to both projected increases in costs (largely stripping and wet mining costs) and likely reductions in revenue (a falling tin price and reduced monthly production rate due to stripping constraints). The Board is continuing to work with Galena, and will work with the Administrator of VDM PL, on mechanisms for financial restructuring of the Company and its subsidiary, including reviewing other project opportunities, with the aim of re-financing and re-commencement of trading in the Company’s shares within the six month period permitted under the AIM Rules.”
The Scotia and Endurance projects being developed by the company had a planned capacity of 1,300 tpy of tin-in-concentrates and were also expected to generate by-product revenues from sales of sapphires. However tin ore grades have been lower than expected and very few sapphires have been recovered in trial mining.
