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Eastern Goldfields settles contractor payment issues

Eastern Goldfields Ltd. believes that it has sorted the issue of outstanding payments to its contractors and is confident it can pay its bills.

News reports emerged prior to this week's Diggers & Dealers Mining Forum in Kalgoorlie, Australia, that contractors would be protesting at the event over nonpayment by Eastern Goldfields.

However, Executive Chairman Michael Fotios said the company had been working with its suppliers and the "vast majority" of the contractor payments had been made.

"I think we've communicated very effectively with all of our suppliers in the last few days since the news came out that people were planning to [protest]," he told reporters Aug. 8 at Diggers & Dealers.

"I've got a very good commercial and supply team that have been working on this for a number of days and as far as I know I think that's been taking care of. We have got a number of people that have gone back to site today who are finishing work for us."

Fotios said Eastern Goldfields was unable to pay its contractors because the company was waiting on certain rebates and was unable to fill its recent capital raising.

The company was hoping to raise up to A$35 million but only managed to secure A$22 million. Eastern Goldfields announced in April that it secured firm commitments for A$25 million, but GR Engineering's announcement in July that it was suing the company was the biggest reason it was not able to reach its target amount, Fotios said.

The contractor filed a A$9.9 million claim in the Supreme Court of Western Australia to recover payments related to refurbishment work on the Davyhurst gold project.

Fotios said Eastern Goldfields was unable to close the deal to raise the additional A$3 million.

"That was just a function of what happened with that GR announcement," he said.

However, Fotios is confident Eastern Goldfields will not face any further issues paying its contractors, adding that the company has the "available facilities" now.

"We've got the funding in place to manage it now," he said.