Iron ore mining junior Western Desert Resources has hit the deck, today appointing administrators after entering into a trading halt on Friday.
A falling iron ore price coupled with a strong Aussie dollar – both of which are showing no signs of abating in the near term – have squeezed the miner’s margins.
Overnight iron ore September 62% futures fell another 87 cents to $83.84 a tonne.
Western Desert entered into voluntary administration after negotiations for further financial support from Macquarie Bank were unsuccessful.
“WDR have been in ongoing negotiations with MBL (Macquarie Bank) regarding the restructure of its project finance facility term, debt repayment profile and short term working capital funding requirements,” company secretary Mark Seatree said.
Macquarie withdrew its offer of short term working capital funding support on Wednesday morning, forcing the company to appoint voluntary administrators KodaMentha today.
“Regrettably, acting on legal advice, WDR directors have no alternative but to appoint a voluntary administrator,” Seatree said.
Australia’s iron ore mining giants Rio Tinto, BHP Billiton, Vale and Fortescue Metals Group have all been ramping up production in the face of the dropping iron ore price.
The volume play is one which is squeezing higher cost, smaller iron ore miners out of the sector in the hope the big miners can take back market share in the longer term.
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