Sons of Gwalia
Encyclopedia
Sons of Gwalia was a Western Australia
n mining
company which mined gold
, tantalum
, spodumene
, lithium
and tin
.
Sons of Gwalia was Australia's third-largest gold producer and also controlled more than half the world's production of tantalum, before entering administration
in August 2004 following a financial collapse.
mine established in the late 19th century, and which gave its name to the nearby town of Gwalia
. The original mine
is notable in that it was founded and managed by Herbert Hoover
(later to become the President of the United States). That mine closed down in 1963.
In 1998, the company closed its Laverton Gold Mine
, which it sold to Focus Technologies Limited for A$2.68 million in July 2002.
The company appointed Mark Cutifani
, well regarded in the mining industry, as managing director on 13 March 2000.
On 4 September 2000, a flight
to the Gwalia mine with seven SGW employees failed to land, instead continuing on to Burketown
, where it eventually crashed, having run out of fuel. The pilot and the plane's seven passengers were killed.
In February 2001, the company announced it had consolidated its Southern Cross
operations, acquiring the remaining 30% of the Yilgarn Star Gold Mine it didn't own and merging the operation with Marvel Loch, closing the Yilgarn Star mill. It also acquired other interests in the region in this transaction.
On 23 August 2001, SGW made a takeover offer for Pacmin Mining, owner of the Carosue Dam Gold Mine
and the Tarmoola Gold Mine
, valued at A$159 million. At the close of offer on 16 October 2001, SGW held 98.9% of all Pacmin shares and proceeded to compulsory acquisition. In retrospect, the purchase of Pacmin and Tarmoola was seen as very expensive, especially in the light of gold reserve write downs and operational difficulties at the Tarmoola mine.
In early 2003, the company started to show signs of being troubled. It had to deny reports by UBS Warburg on 13 February 2003, that one of its investment bankers had withdrawn support. The following day, managing director Mark Cutifani, in a surprise move, resigned from his position. In July 2003, the company announced the results of a restructering, aimed at improving the performance of SGW. In October that year, the company successfully raised A$63 million by issuing new shares.
Almost a year after the resignation of Mark Cutifani, John Leevers was appointed as managing director of the company from 27 January 2004. In April 2004, the company's chairman, Peter Lalor and his brother Chris, an executive director, having founded the company 22 years earlier, resigned from their positions on the board. John Leevers was instead appointed as managing director and CEO.
in August 2004 following a financial collapse, with debts exceeding $800 million after suffering from falling gold reserves and hedging losses. Sons of Gwalia was Australia's third-largest gold producer and also controlled more than half the world's production of tantalum.
In March 2005, the company sold its gold mining operations, consisting of the Marvel Loch Gold Mine
, the Gwalia Gold Mine
, the Carosue Dam Gold Mine
and the Tarmoola Gold Mine
, to St Barbara Mining Limited for A$
38 Million. Talison Minerals
paid $205 million to buy the Wodgina and Greenbushes tantalum business of Sons of Gwalia but has since temporarily closed Wodgina because of falling tantalum prices.
In a landmark decision, the shareholders of Sons of Gwalia were awarded the same status as non-shareholding creditors on 27 February 2006 because the company breached continuous disclosure obligations or misled them about its financial status. On 29 August 2006, Sons of Gwalia (SGW) was delisted from the Australian Securities Exchange
.
On 4 September 2009, the former auditors of Sons of Gwalia, Ernst & Young
, agreed to a $125 million settlement over their role in the gold miner’s collapse. Ferrier Hodgson
, the company's administrator, had claimed Ernst & Young was negligent over the accounting of gold and dollar hedging contracts. He hopes $178 million of assets will assist in bringing the long-running administration to a close in December 2009.
In addition to the $125 million from E & Y, SoG's former directors, the Lalor brothers, agreed to a $53 million settlement over their role in the company's collapse.
Western Australia
Western Australia is a state of Australia, occupying the entire western third of the Australian continent. It is bounded by the Indian Ocean to the north and west, the Great Australian Bight and Indian Ocean to the south, the Northern Territory to the north-east and South Australia to the south-east...
n mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
company which mined gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, tantalum
Tantalum
Tantalum is a chemical element with the symbol Ta and atomic number 73. Previously known as tantalium, the name comes from Tantalus, a character in Greek mythology. Tantalum is a rare, hard, blue-gray, lustrous transition metal that is highly corrosion resistant. It is part of the refractory...
, spodumene
Spodumene
Spodumene is a pyroxene mineral consisting of lithium aluminium inosilicate, LiAl2, and is a source of lithium. It occurs as colorless to yellowish, purplish, or lilac kunzite , yellowish-green or emerald-green hiddenite, prismatic crystals, often of great size...
, lithium
Lithium
Lithium is a soft, silver-white metal that belongs to the alkali metal group of chemical elements. It is represented by the symbol Li, and it has the atomic number 3. Under standard conditions it is the lightest metal and the least dense solid element. Like all alkali metals, lithium is highly...
and tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
.
Sons of Gwalia was Australia's third-largest gold producer and also controlled more than half the world's production of tantalum, before entering administration
Administration (insolvency)
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going...
in August 2004 following a financial collapse.
First incarnation
The original "Sons of Gwalia" was a goldGold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
mine established in the late 19th century, and which gave its name to the nearby town of Gwalia
Gwalia, Western Australia
Gwalia is a former gold-mining town located 233 kilometres north of Kalgoorlie and 828 kilometres east of Perth in Western Australia's Great Victoria Desert. Today, Gwalia is essentially a ghost town, having been largely deserted since the main source of employment, the Sons of Gwalia...
. The original mine
Gwalia Gold Mine
The Gwalia Gold Mine is located at Gwalia, a few kilometres south of Leonora, Western Australia. It was originally established by Welsh miners in the late 19th century and Herbert Hoover, the later President of the United States, served as the mine manager in its early days from May to November...
is notable in that it was founded and managed by Herbert Hoover
Herbert Hoover
Herbert Clark Hoover was the 31st President of the United States . Hoover was originally a professional mining engineer and author. As the United States Secretary of Commerce in the 1920s under Presidents Warren Harding and Calvin Coolidge, he promoted partnerships between government and business...
(later to become the President of the United States). That mine closed down in 1963.
Second incarnation
The current Sons of Gwalia began operations in 1981.In 1998, the company closed its Laverton Gold Mine
Laverton Gold Mine
The Laverton Gold Mine is a gold mine 9 km east of Laverton, Western Australia. It is currently owned by Crescent Gold Limited and has recommenced mining in August 2009, after having been shut for just over one year...
, which it sold to Focus Technologies Limited for A$2.68 million in July 2002.
The company appointed Mark Cutifani
Mark Cutifani
Mark Cutifani is an Australian businessman and the current CEO and a director of South African gold mining company AngloGold Ashanti, a position he has held since October 2007....
, well regarded in the mining industry, as managing director on 13 March 2000.
On 4 September 2000, a flight
2000 Australia Beechcraft King Air crash
Sierra Kilo Charlie was the call sign for chartered Beechcraft 200 Super King Air which, on 4 September 2000, crashed near Mount Isa, Queensland, Australia. The flight plan of the aircraft called for the pilot to fly between Perth, Western Australia, and the mining town of Leonora, Western...
to the Gwalia mine with seven SGW employees failed to land, instead continuing on to Burketown
Burketown, Queensland
- Morning glory cloud :From the months of August to November, a rare meteorological phenomenon known as "Morning Glory" - long, tubular clouds, some up to 1000 km in length - is often observed in the skies above Burketown.....
, where it eventually crashed, having run out of fuel. The pilot and the plane's seven passengers were killed.
In February 2001, the company announced it had consolidated its Southern Cross
Southern Cross, Western Australia
Southern Cross is a town in Western Australia, 371 kilometres east of Perth on the Great Eastern Highway. It was founded by gold prospectors in 1888, and gazetted in 1890. It is the major town and administrative centre of the Shire of Yilgarn...
operations, acquiring the remaining 30% of the Yilgarn Star Gold Mine it didn't own and merging the operation with Marvel Loch, closing the Yilgarn Star mill. It also acquired other interests in the region in this transaction.
On 23 August 2001, SGW made a takeover offer for Pacmin Mining, owner of the Carosue Dam Gold Mine
Carosue Dam Gold Mine
The Carosue Dam Gold Mine is a gold mine located south of Laverton, Western Australia.It is currently owned by Saracen Mineral Holdings Limited.Carosue Dam was previously owned by the now defunct mining company Sons of Gwalia Limited...
and the Tarmoola Gold Mine
Tarmoola Gold Mine
The Tarmoola Gold Mine is a gold mine located 29 km north-west of Leonora, Western Australia. The mine has been placed in care and maintenance since September 2004, when a pit wall failure forced its closure.It is owned by St Barbara Limited...
, valued at A$159 million. At the close of offer on 16 October 2001, SGW held 98.9% of all Pacmin shares and proceeded to compulsory acquisition. In retrospect, the purchase of Pacmin and Tarmoola was seen as very expensive, especially in the light of gold reserve write downs and operational difficulties at the Tarmoola mine.
In early 2003, the company started to show signs of being troubled. It had to deny reports by UBS Warburg on 13 February 2003, that one of its investment bankers had withdrawn support. The following day, managing director Mark Cutifani, in a surprise move, resigned from his position. In July 2003, the company announced the results of a restructering, aimed at improving the performance of SGW. In October that year, the company successfully raised A$63 million by issuing new shares.
Almost a year after the resignation of Mark Cutifani, John Leevers was appointed as managing director of the company from 27 January 2004. In April 2004, the company's chairman, Peter Lalor and his brother Chris, an executive director, having founded the company 22 years earlier, resigned from their positions on the board. John Leevers was instead appointed as managing director and CEO.
Administration
The company entered administrationAdministration (insolvency)
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going...
in August 2004 following a financial collapse, with debts exceeding $800 million after suffering from falling gold reserves and hedging losses. Sons of Gwalia was Australia's third-largest gold producer and also controlled more than half the world's production of tantalum.
In March 2005, the company sold its gold mining operations, consisting of the Marvel Loch Gold Mine
Marvel Loch Gold Mine
The Marvel Loch Gold Mine is a gold mine located at Marvel Loch, 30 km south of Southern Cross, Western Australia.It is operated by St Barbara Limited...
, the Gwalia Gold Mine
Gwalia Gold Mine
The Gwalia Gold Mine is located at Gwalia, a few kilometres south of Leonora, Western Australia. It was originally established by Welsh miners in the late 19th century and Herbert Hoover, the later President of the United States, served as the mine manager in its early days from May to November...
, the Carosue Dam Gold Mine
Carosue Dam Gold Mine
The Carosue Dam Gold Mine is a gold mine located south of Laverton, Western Australia.It is currently owned by Saracen Mineral Holdings Limited.Carosue Dam was previously owned by the now defunct mining company Sons of Gwalia Limited...
and the Tarmoola Gold Mine
Tarmoola Gold Mine
The Tarmoola Gold Mine is a gold mine located 29 km north-west of Leonora, Western Australia. The mine has been placed in care and maintenance since September 2004, when a pit wall failure forced its closure.It is owned by St Barbara Limited...
, to St Barbara Mining Limited for A$
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
38 Million. Talison Minerals
Talison Minerals
Talison Minerals Pty Ltd was a mining company based in Australia. It was split into Talison Lithium and Talison Tantalum, now known as Global Advanced Metals, in 2009. The two largest mining operations of the company have been near Greenbushes, Western Australia and Wodgina, Pilbara Region,...
paid $205 million to buy the Wodgina and Greenbushes tantalum business of Sons of Gwalia but has since temporarily closed Wodgina because of falling tantalum prices.
In a landmark decision, the shareholders of Sons of Gwalia were awarded the same status as non-shareholding creditors on 27 February 2006 because the company breached continuous disclosure obligations or misled them about its financial status. On 29 August 2006, Sons of Gwalia (SGW) was delisted from the Australian Securities Exchange
Australian Securities Exchange
The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
.
On 4 September 2009, the former auditors of Sons of Gwalia, Ernst & Young
Ernst & Young
Ernst & Young is one of the largest professional services networks in the world and one of the "Big Four" accountancy firms, along with Deloitte, KPMG and PricewaterhouseCoopers ....
, agreed to a $125 million settlement over their role in the gold miner’s collapse. Ferrier Hodgson
Ferrier Hodgson
Ferrier Hodgson is a group of Accounting firms specialising in Insolvency in the Australian and Asia Pacific region, with offices in all major capital cities in Australia, Singapore, Malaysia, Indonesia, and Japan...
, the company's administrator, had claimed Ernst & Young was negligent over the accounting of gold and dollar hedging contracts. He hopes $178 million of assets will assist in bringing the long-running administration to a close in December 2009.
In addition to the $125 million from E & Y, SoG's former directors, the Lalor brothers, agreed to a $53 million settlement over their role in the company's collapse.
Gold
| Year | Production | Grade | Cost |
| 1997-98 | 517978 ozt (16,110.9 kg) | ||
| 1998-99 | |||
| 1999-2000 | 413184 ozt (12,851.5 kg) | A$337/ozt (A$10.8/g) | |
| 2000-01 | 438166 ozt (13,628.5 kg) | ||
| 2001-02 | 541224 ozt (16,833.9 kg) | ||
| 2002-03 | 577702 ozt (17,968.5 kg) | A$454/ozt (A$14.6/g) | |
| 2003-04 | 521081 ozt (16,207.4 kg) | A$438/ozt (A$14.1/g) | |
| 2004-05 |
Tantalum
| Year | Production |
| 1997-98 | 877281 lb (397,928 kg) |
| 1998-99 | |
| 1999-2000 | 1111967 lb (504,379.7 kg) |
| 2000-01 | 1625364 lb (737,252.7 kg) |
| 2001-02 | 2138841 lb (970,162 kg) |
| 2002-03 | 2193792 lb (995,087.3 kg) |
| 2003-04 | 2290000 lb (1,038,726.5 kg) |
| 2004-05 |
Timeline
- 5 May 1983: Listed on the Australian Securities ExchangeAustralian Securities ExchangeThe Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
. - 30 July 1992: Changed name from Sons of Gwalia NL to Sons of Gwalia Limited.
- 13 March 2000: Mark Cutifani appointed as managing director.
- 4 September 2000: A flight2000 Australia Beechcraft King Air crashSierra Kilo Charlie was the call sign for chartered Beechcraft 200 Super King Air which, on 4 September 2000, crashed near Mount Isa, Queensland, Australia. The flight plan of the aircraft called for the pilot to fly between Perth, Western Australia, and the mining town of Leonora, Western...
from Perth to the Gwalia mine fails to land and continues on to North Queensland, where it crashes without survivors. - 23 August 2001: SGW makes takeover offer for Pacmin Mining, valued at A$159 million.
- 16 October 2001: Compulsory acquisition of Pacmin announced, at a cost of A$210 million.
- 14 February 2003: Managing director Mark Cutifani resigned from his position.
- 15 October 2003: The company successfully raised A$63 million by issuing new shares.
- December 2003: Gwalia Gold Mine closed and placed in care and maintenance.
- 19 January 2004: John Leevers appointed as managing director. Peter and Chris Lalor to retire from company.
- 30 August 2004: AdministratorsAdministration (insolvency)As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going...
appointed for the company. - 17 September 2004: Class action filed against company as well as directors, auditors and officers of company by share holders.
- 28 January 2005: Five directors, including the chairman, and the company secretary resign.
- 15 March 2005: Managing director John Leevers resigns.
- 21 March 2005: Gold operations sold to St Barbara for A$38 million.
- 15 September 2005: Share holders awarded equal status to creditors in court.
- 29 August 2006: Company delisted from the ASX after failing to pay its annual listing fee.