The restart of a Tasmanian nickel mine is being jeopardised by an unreasonable power contract with Aurora Energy that is stretching the project company's cash flow at a critical time, Braddon Labor MHA Shane Broad told parliament on Wednesday.
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Mallee Resources bought the long-closed Avebury Nickel Mine in the state's West last year and restarted production in September, but before doing so, was forced to contract with Aurora Energy at high rates and made to pay a substantial security bond to the state company before it agreed to supply power.
"They were forced to pay a $1.8 million bond to Aurora Energy before they could restart the mine, which has created a cash flow problem for this critical business, " Mr Broad said.
Mallee Resources managing director John Lamb said that Aurora was still holding $1.5 million of the bond at a crucial time when the company needed to spend $25 million to build infrastructure to further progress the mine, including accommodation for 200 Tasmanian workers and a processing plant upgrade.
"We've been in discussions with Aurora and with the Tasmanian government on this issue over several months, and Aurora is the only supplier to Avebury insisting on holding a cash bond ... and $1.5 million of shareholders' cash is a lot of money for a startup business that employs 200 Tasmanians," Mr Lamb said.
He said plans for Mallee Resources' stock market listing, which would have made raising funds easier, were recently delayed due to the volatility in finance markets, Mr Lamb said. With the IPO delayed and the $1.5million tied up with the bond, cash flow is tighter than it needed to be.
Responding in parliament on Wednesday, Energy Minister, Guy Barnett, said the government had demonstrated ample support for the state's mining sector.
"We've had a very cooperative relationship with the Avebury Nickel Mine and John Lamb in terms of the government's support to encourage the reopening of that mine," Mr Barnett said.
He did not refer to Aurora Energy or the $1.5 million bond in his answer.
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