A heads of agreement (HOA) between failed base metals miner Kagara and Mungana Goldmines has collapsed after unfavourable ruling from the Australian Tax Office.
An agreement was reached in December whereby Kagara would hand back its 95.6 million Mungana Gold Mines shares, in exchange for the return of the gold rights and cancellation of other debts between the companies.
On 21 February, 2013, Mungana Goldmines announced it had received a private ruling from the ATO which “does not confirm the full availability of tax losses to offset any tax liability arising from the HOA transaction”.
As a result of this failed key condition, the HOA it was terminated.
The administrators of Kagara and Mungana have agreed to continue discussions with Mungana Goldmines on an alternate arrangement regarding the disposal of the assets.
Kagara and its wholly owned subsidiaries Kagara Copper, Mungana and Einasleigh Mining were placed into administration on 29 April last year.
On 29 January, the administrators of Kagara and its three subsidiaries announced that Kagara and Einasleigh Mining completed the sale of part of the groups’ assets in the central region of North Queensland.
Snow Peak Mining, a company associated with Consolidated Tin Mines, acquired all the groups’ assets in the Central Region, including the resources and processing plant at Mt Garnet; the Balcooma and Baal Gammon mining areas; and the Einasleigh and Maitland exploration projects.
The proceeds from the sale were used to pay down secured debt, trading costs and administration expenses, with the balance to be retained for working capital.