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GRD Macraes advised to settle bond issues over Reefton mines

By NZPA

Thursday 14th November 2002

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Perth-based miner GRD Macraes has been warned there will be no mining at its Reefton's Globe Progress site unless outstanding bond issues are resolved.

West Coast Regional Council chairman John Clayton issued the warning as the council discussed mining bond issues relating to GRD Macraes and Solid Energy.

"Macraes will not put a blade in the ground until we've got it sorted out," Mr Clayton said.

Council chief executive Terry Day had earlier revealed that staff were no nearer to solving the problems relating to bonds with Macraes.

Mr Day said problems in the insurance industry since September 11 had made it increasingly difficult for companies to raise the necessary finance.

"September 11 has caused a lot of issues... many banks have gone back to their core business and short-term risk options.

"Our inquiries into bank bonds leads us to believe that these are attainable at a price of course, as this market has toughened up as well."

Under resource consents issued for the Globe-Progress Mine, GRD Macraes has to provide an $8 million bond.

Mr Day suggested that the $8 million had just been "a number pulled out of the air" but it was still part of the consents the company had agreed to.

Council staff were discussing the form of the bond, including the company's offer of a three-year rolling insurance bond instead of a bank bond. GRD Macraes told council that bank bonds were currently hard to obtain, and an insurance bond would suffice for the purposes of the consent.

Mr Day said the regional council considered three-year rolling bonds risky as an insurance company could decide to exit, or fall over, leaving council with a hole in the ground.

"A bank bond would allow us access to the bond monies for the duration of the mine activity."

The mine is expected to employ 80 people and boost Reefton's economy by $4.8 million a year. GRD plans to lower the top of Globe Hill, 5km south-east of Reefton, by digging a 36ha mine pit over the next seven to 15 years.

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