The recent developments in the Calidus Resources Group saga have taken a surprising turn, with Australian mining magnate Mark Creasy stepping in to rescue the embattled gold miner. Creditors have now voted in favour of a Deed of Company Arrangement (DOCA) proposed by West Coast Gold Pty Ltd, a company owned by Creasy through his investment vehicle, Yandal Investments. This comes after Calidus, once touted as a rising star on the ASX, found itself in financial strife largely due to challenges at its Warrawoona Gold Project in Western Australia’s Pilbara region.
Following months of uncertainty and voluntary administration, creditors have resolved to implement the West Coast DOCA proposal, marking a significant moment for Calidus’ future. The move offers a potential lifeline for the company, its creditors, and its employees.
Mark Creasy’s $149 Million Power Play
The pivotal moment in the Calidus saga came when Mark Creasy, a well-known Australian prospector with a track record of successful mining ventures, acquired $149 million of Calidus’ debt from Macquarie Bank. This bold action not only gave him significant leverage over the future of the company but also positioned his company, West Coast Gold Pty Ltd, as the driving force behind the DOCA proposal that ultimately gained near-unanimous support from creditors.
Creasy’s investment vehicle, Yandal Investments, is no stranger to high-stakes plays in the mining sector. By purchasing Calidus’ debt, Creasy has effectively taken control of the company’s future, betting that the Warrawoona Gold Projectcan be turned around despite its troubled history of delays and cost overruns.
West Coast DOCA: What It Entails
The West Coast DOCA represents a structured plan designed to keep Calidus’ operations running while maximising returns to creditors. The proposal involves transferring 100% of Calidus shares to West Coast Gold Pty Ltd, effectively handing over ownership of the company to Mark Creasy’s group.
The DOCA offers several potential benefits for creditors, including:
- Repayment Pathway: By taking ownership of Calidus, West Coast Gold aims to restructure the company, which could provide a pathway for creditors to recover more of their claims than would be possible under a liquidation scenario.
- Continued Operations: The DOCA allows the company to remain operational, avoiding the drastic disruption that would accompany a shutdown or sale of its assets in a distressed environment.
- Employee Stability: Creasy’s backing has provided much-needed reassurance to Calidus’ workforce and suppliers, both of whom were at risk of losing out in the event of liquidation.
The Directors’ DOCA Proposal Falls Short
Prior to the 27 September 2024 creditor meeting, there was a competing proposal on the table—the Directors’ DOCA Proposal, which was backed by Calidus' management. However, despite some progress, it became clear that the directors' plan was not sufficiently advanced to be completed within the required timeframe. By late September, the Calidus board withdrew its support for the directors’ proposal, leaving the West Coast DOCA as the only viable option.
This shift in support ultimately cleared the path for Mark Creasy’s West Coast Gold to take control of Calidus, allowing the company to focus on recovery and restructuring under new ownership.
Section 444GA: Implications for Shareholders
\While the West Coast DOCA offers a clear pathway for creditor repayment, it presents a different set of challenges for shareholders. The plan involves transferring all of Calidus’ shares to West Coast Gold Pty Ltd under Section 444GA of the Corporations Act. This legal mechanism allows for the transfer of shares if they are deemed to have no residual value, provided it doesn’t unfairly prejudice shareholders.
The process will require court approval, during which an independent expert will assess whether Calidus’ shares have any remaining value. If the court agrees that the shares are worthless, they will be transferred to Creasy’s group, effectively wiping out the company’s current shareholders. Shareholders will have an opportunity to contest this ruling in court, but FTI Consulting anticipates that the process will be completed by late November 2024.
If the court does not approve the share transfer, the fallback option would see ownership of Calidus’ key assets, such as Keras Pilbara and Calidus Blue Spec, transferred to West Coast Gold instead.
Conclusion: A New Chapter for Calidus Resources
The decision by creditors to back the West Coast DOCA marks a new chapter in Calidus Resources’ turbulent history. With Mark Creasy now at the helm, the company’s prospects look brighter than they did just a few months ago. However, challenges remain, particularly in reviving the Warrawoona Gold Project and navigating the complex process of shareholder resolution.
For now, the focus will be on stabilising the company and implementing the DOCA, with FTI Consulting overseeing the final steps of the administration process. While there are no guarantees, the involvement of Creasy and his backing through Yandal Investments gives Calidus a fighting chance at recovery.
