The Australian Securities Exchange has queried the financial position of GBM Gold Ltd – the company which plans to resurrect gold mining in the region.
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A letter addressed to the company by an ASX compliance officer asked GBM Gold to detail what plans it has to arrest “negative operating cash flows” which were detailed in the company’s quarterly report.
In its latest financials, GBM Gold revealed negative net operating cash flows for the March 2018 quarter of $268,000, cash at the end of the quarter of $98,000 and estimated cash outflows for the next quarter of $350,000.
The ASX requires companies that are subject to quarterly reporting to explain to the market how they expect to continue their operations and meet their business objectives if they appear to have ongoing negative cash flows.
Read more: GBM Gold reapplies for mining licence
In response, GBM Gold secretary Andrew Chan said the company has received approval from Earth Resources for its Harvest Home Open Pit Mine expansion, the planning application for which is currently before the Loddon Shire Council.
GBM Gold and its partner plan to excavate 44,000 tonnes of ore, at an estimated grade of 2.46 grams of gold per tonne.
“GBM is in advanced discussions with interested parties in relation to raising capital to continue funding its current and future operations. The board believes that GBM has the ability to successfully raise additional capital based on its previous ability to raise funds when required and the discussions currently being held,” Mr Chan said.
Potential operations include the Kangaroo Flat Coarse Sand Dam project, which will recover an estimated 7000 ounces of residual gold in the dam.
The company is yet to make a decision on the future of the Kangaroo Flat mine, purchased in 2015.
An ASX spokesperson said it will continue to closely monitor a company’s disclosure, including its future quarterly reports. “ASX must be satisfied that a company’s financial condition is adequate to warrant its ongoing quotation,” he said.
“Once an explanation is disclosed, the market can then make it assessment. Trading halts can be used to prevent uninformed or disorderly trading if a company can’t respond to ASX’s query promptly.”
A spokesperson for GBM Gold said it had many “irons in the fire” which will result in the necessary funding required for the ongoing maintenance of existing operations.
The spokesperson suggested the ASX query was “certainly nothing out of the ordinary”.
GBM Gold last year sold its processing plant at the Kangaroo Flat mine for $6.2 million – $2.07 million of which will go to previous owner of the mining site, Unity Mining. Shares in GBM were trading at $0.009 on May 18.
