Cradle Arc PLC applied to the Botswana High Court for its 60%-owned subsidiary, Leboam Holdings Pty. Ltd., to be placed into provisional liquidation as it conducts discussions to secure alternative funding.
Leboam holds the Mowana copper mine, which was recently suspended with the company citing working capital "constraints" that left it unable to pay salaries.
Cradle Arc CEO Kevin van Wouw said, "Provisional liquidation as opposed to final liquidation is by no means the end for Mowana, but rather provides the company an opportunity to continue talks, along with the provisional liquidator, for a sustainable funding solution at the mine."
Earlier in December, the miner reportedly secured a US$4 million working capital facility from Fujax Minerals and Energy Ltd., with an initial US$1 million drawn down.
However, both parties failed to reach a consensus over the collateral when Cradle Arc sought to draw down the remaining US$3 million.
Fujax has now said it will not permit any further drawdowns unless Leboam agrees to change the previously agreed terms and grant security over its interest in the Mowana mine for all outstanding historical and new debt owed to Fujax, according to a Dec. 18 release.
Fujax and Leboam's 40% shareholder separately applied to the Botswana High Court to consider placing Leboam under judicial management or under provisional liquidation.
Cradle Arc said it is against the application for judicial management as Fujax has neither a viable alternative financing plan for Leboam nor a credible business plan for Mowana.
The company noted that during the suspension, it has conducted remedial action at the process plant, the water provision from its wellfield and other mine infrastructure.
Rental agreements for mining equipment have been canceled and equipment removed from the site until creditors are paid.