Mining at the Mowana site has been suspended with trading in the junior’s shares also halted.
READ: Cradle Arc ticks up as it hails “vote of confidence” in Mowana project with working capital extension
Fujax Minerals provided US$1mln of the loan but wanted security over Mowana for all of its loans before it would provide the remainder.
Other secured lenders with a charge over the mine were not willing to agree to this, said Cradle Arc.
The board is seeking insolvency advice, said the statement.