G6M Shareholders lose out

MINOR shareholders in financially troubled King Island mining company Group 6 Metals have welcomed moves by the State Government to support the long-term sustainability of the company but questioned the resulting dilution of the value of their shares. 

While hopeful of the mine’s turnaround with new management and the government providing confidence for investors, shareholders feel that the moves have further diluted share values. 

A debt-to-equity conversion agreement with G6M will allow the mine to continue operating, securing ongoing economic benefits for the island. 

Business, Industry and Resources Minister Eric Abetz emphasised the mine’s vital role in the local economy, supporting about 95 direct jobs along with many local businesses. 

“The Dolphin Tungsten Mine is a major employer on King Island and a key contributor to the local economy,” Mr Abetz said. 

“To give the mine the best chance of success, the Government is converting its existing $10 million loan into an equity stake in Group 6 Metals, as part of a broader turnaround plan developed by the company and its senior lenders.” 

This decision reinforces G6M’s financial position and facilitates essential improvements to mining operations. 

“This is intended to be a short to medium-term investment to help stabilise the mine through challenging global conditions. “The Tasmanian Government remains committed to working closely with the company to support the mine’s ongoing operations and ensure its long-term viability,” Mr Abetz said.

Group 6 Metals Executive Chair Kevin Pallas said the company was very appreciative of the Tasmania Government’s support while working through the recapitalisation plan as announced in December 2024. 

The $10 million loan was originally provided by the Tasmania Government in 2022 and, subject to shareholder approval, when converted to equity this will help deleverage the company’s balance sheet.” 

Many minor shareholders live on King Island or are connected through family, friends or worked for the original King Island Scheelite mine. Local islanders do not want to be named, however have told the Courier: 

“This gives a little more confidence when the government has taken a stake, but I do think that this dilutes my initial investment.” 

“I would like to see the government supporting the minor shareholders." 

“I was employed by the mine for 25 years. I was one of the last to leave the site. I know a lot of small shareholders on and off the island and most think they are going to lose their investment. 

“One bought in at 0.20c and they said that their shares are worth less than 0.1c today. 

“Shares are risky, but there has been such talk up about this mine. 

“What happens when the government decides to get out of the investment business on the island? 

“I hope it’s when everything has been turned around.” 

“If it was any other mineral they were mining this business would have become insolvent quite a while ago,” share forum Hot Copper said. 

“Fortunately Tungsten is a highly strategic element especially with great military uncertainty and hot conflicts occurring. 

“Without the government support and loans I doubt the private sector loans would be happening."

"The present shareholders are likely to lose most of their investment when the loans are converted to equity. 

“I hope it will survive and I think that it will because of world politics and the need for the US in particular to build robust supply chains for strategic minerals. 

“However the shareholders will have only the choice of losing most or all of the value of their shares when they vote at the Extraordinary General Meeting.” 

The equity conversion is still subject to regulatory and shareholder approvals.