Strandline Resources: Taxpayers on the hook as Mid West mineral sands miner falls into administration

More than $130 million of Federal Government funds are tied up with a local mineral sands miner that is now insolvent. Strandline Resources has fallen into administration after long-running talks to bring in fresh cash failed. The shares of ASX-listed Strandline, which counts the Coburn heavy mineral sands project near Shark Bay as its key asset, have been in suspension for more than a year as the business battled to stave off collapse. Thomas Birch and Jeremy Nipps of Cor Cordis were appointed as administrators on Friday. McGrathNicol’s Rob Brauer, Linda Smith and Jason Preston were picked by secured creditors to act as receivers. The receivers intend to continue operating Strandline on a “business as usual” basis while a sale or recapitalisation is considered. A statement to the ASX on Monday morning said the company had been working to improve operating performance at the mineral sands mine while trying to restructure debts. The company ran out of cash to keep it afloat before a restructure could be finalised, however. The West Australian revealed in January that the Federal Government’s Northern Australia Infrastructure Facility would likely take a haircut on its debts as Strandline’s single biggest financier. NAIF, which was initially set up to fund public infrastructure, had loaned the failed miner about $135m and touted Coburn as ”game-changing”. NAIF started pouring money into Strandline during 2020 and kept the funding tap flowing as recently as September when $5m was parachuted in to help build an airstrip near Coburn. Strandline had sought to reduce its ongoing transport costs with the airstrip. A NAIF spokesman declined to reveal if the government entity would be amenable to taking a haircut on its debts and why more funding was provided in September when Strandline’s dire financial situation was already well known. “As a financier to the project, and given the project is now in administration, it would not be appropriate for NAIF to comment on the company’s plans around financing other than to refer to what the company has already publicly announced,” the spokesman said. “We are working with Strandline to ensure the Coburn project is a success, ensuring that the economic and public benefits from the project are delivered.” Strandline offloaded its Tanzanian mineral sands assets in August for about $43m to help pay down its debts, which stood at $338.7m by the end of the 2024 financial year. The company had just $3m of cash left by the end of the September quarter — its most recent quarterly update — after Coburn burnt through about $6m during those three months. Strandline shipped first product from the $260m project in 2022 and has struggled to keep its head above water since. The heavy mineral concentrate from the wet concentrator at Coburn is processed further to produce the final products of chloride ilmenite, rutile, premium zircon and zircon concentrate. NAIF has said it backed Coburn because the project would generate up to $922m in “economic impact” to regional communities over 25 years and create up to 190 jobs once operational. Strandline’s shares last traded at 9.5¢ each. NAIF was originally set up to back infrastructure projects in remote regions across WA, Queensland and the Northern Territory, particularly in areas with high Aboriginal populations. But a dearth of those types of projects led NAIF to broaden its scope to include more mining developments, which has caused some notable dramas. Potash producer Kalium Lakes went bankrupt in August 2023 after NAIF had loaned more than $80m. NAIF had also pledged to give $140m to Australia Potash, which like Kalium went under, but this loan did not proceed before the miner collapsed.