MELBOURNE, April 22 (Reuters) - Discovery Metals Ltd's top shareholder and former suitor, Chinese firm Cathay Fortune Corp, said on Monday it will not support the Africa-focused copper producer's plan to shore up its funding.
Cathay Fortune, a private equity firm founded by Chinese billionaire Yu Yong, working with the China-Africa Development Fund, scrapped an A$824 million ($849 million) bid for Discovery Metals in February over concerns about the target's key copper project in Botswana.
But it remains Discovery's top shareholder, with a 13.7 percent stake, according to Thomson Reuters data.
Discovery said in its quarterly report released late on Friday that it had A$16.9 million in cash, down nearly two-thirds from the amount available in December.
Cathay Fortune on Monday raised concerns about the rapid cash burn and negative cash flow from operations, and said it saw no sign of improvement in the near future due to a sharply lower-than-expected grade of ore at the Boseto mine.
"In view of the continuous disappointing operation results which never achieve what the management has planned, we cannot foresee any possibility of improvement of such sustained cash flow disequilibrium under the gloomy commodity market situation," it said in a statement emailed to Reuters.
Discovery Metals went on a trading halt on Friday pending an announcement on a financing plan.
Cathay Fortune said the plan would hurt existing shareholders and it would not participate.
Discovery's stock last traded at 34 cents, one-fifth of the A$1.70 a share that Cathay Fortune and its partner had offered. ($1 = 0.9704 Australian dollars) (Reporting by Sonali Paul; Editing by Richard Pullin)