Clive Palmer has been seeking a $40 million bailout for his struggling Townsville nickel refinery. Credit:Glenn Hunt It holds the key to whether Palmer is on the road to being broke. In his vast array of companies the nickel refinery appears to have been the only significant revenue-producing business for several years. It was the Palmer empire's ATM machine, supplying loans to other cash-constrained parts of his corporate web and more than $15 million to his political campaign coffers. Such a position provides currency to the contention that Palmer's empire is a house of cards – whose foundations depend of the financial health of Queensland Nickel. Intense speculation

Following weeks of intense speculation about his financial state Palmer hit back on Thursday, with a statement laying blame at the feet of Australia's big banks. "Despite unencumbered assets of nearly $2 billion, it [Queensland Nickel] was denied a $35 million overdraft by the four major Australian banks. I have been informed Queensland Nickel was told that in the current investment environment they would not lend to a resources company." Clive Palmer might be looking at the end of his business empire. Credit:Glenn Hunt Ten years ago Palmer jagged an amazing deal, selling the rights to mine magnetite iron ore to the Chinese government-controlled CITIC for $US415 million. It would appear a series of poor investments and a lavish lifestyle has chewed through most, if not all, of this cash. Referring to himself these days as a professional politician rather than a businessman, Palmer still retains a facade of immense wealth – the caricature of a portly, prosperous silvertail. His comments suggest his critics have an ulterior motive.

"It is evident that I am being personally attacked because I am a politician," Palmer said this week. It is evident that I am being personally attacked because I am a politician. Clive Palmer This belies the reality of his true financial position, to the extent that one can piece together the puzzle of his various companies. It seems that his cash reserves are thin indeed. Rather than being a professional politician, Palmer's day job has become a professional litigant, as he juggles numerous court cases aimed at raising money by generating damage payments, mostly from CITIC, his estranged Chinese partner in West Australian iron ore. Largely unprofitable

But this has also been a largely unprofitable endeavour. Palmer's lawyers argued in the case Palmer lost earlier this week that not being awarded the $US48 million ($66.5 million) he was seeking in damages from CITIC would harm his prospects of financing the legal expenses in other actions, expected to cost more than $10 million in the next year alone. More importantly, Palmer's camp say this $US48 million was crucial to fund the operations of the nickel refinery. Its position was so parlous that Palmer's lieutenants signed affidavits saying that unless the funds were furnished by last Monday the refinery would be placed in the hands of administrators and the 800 staff would be left without jobs leading into Christmas. Palmer's lawyer said the Queensland nickel business would be in a "worse-than-perilous" position if it didn't receive the money from CITIC. It is a contention that wasn't wholly convincing for West Australian Supreme Court judge Paul Tottle, who said this week: "I am not satisfied on the evidence that has been adduced that the stark alternatives – namely, grant the injunction or let QN suffer dire consequences – reflect an assessment of all options that one would expect to be considered when a major business is experiencing financial difficulties. There is some evidence to suggest that the National Australia Bank was prepared to consider providing QN with finance . . . but the avenues of finance that the bank was prepared to consider do not appear to have been pursued."

Having failed to convince the West Australian Supreme Court, Palmer has resorted to the Queensland government to come to his rescue – to avoid the collapse of Queensland Nickel. Takes the bait Whether Premier Annastacia Palaszczuk takes the bait remains to be seen. It is not the first time over the past few months Palmer has approached the state government for help. By the time he arrived at the meeting on Tuesday with Pitt, Pitt was already armed with a report the government had commissioned from KPMG, which contained its opinion on the state of Palmer's finances – albeit one that until a few days ago Palmer had refused to assist with. With the state government standing now as the potential lender, or guarantor, of last resort, Palmer has been forced, reluctantly, to co-operate by providing some greater degree of financial transparency. This said, the government is not satisfied Palmer has done a full reveal. "Let me be clear: any decision to close the Yabulu nickel plant will be the decision of Mr Palmer and his alone," Pitt said this week.

It is noteworthy that the two parties that have been taking a peek under Palmer's financial skirts have come to a similar conclusion – that the financial position of the refinery is not as dire as Palmer would have us believe. Pitt said a government-commissioned report had found that Queensland Nickel could "trade its way" out of trouble if the nickel price improved. West Australia's Justice Tottle said he had every reason to surmise that Queensland Nickel was salvageable. He had a set of 2015 accounts in front of him, signed in September 2015, that showed it had an excess of assets over liabilities of $1.9 billion. These accounts were not suggesting a stretched balance sheet or concern about assets values. Rather, the property plant and equipment had been upwardly revalued by $779 million and this allowed the company to book a bottom-line profit of $1.14 billion. Far more telling

Paper profits shouldn't be but can be fairly meaningless in assessing solvency. The company's cash flow is far more telling. In the case of QNI Resources, which houses the nickel operations, it recorded net cash inflow from operating activities in 2015 of $17.9 million. It is a slim margin, based on revenue of $535 million. The trouble is $14.7 million of that cash was lent to a Palmer-related company, which, after some investment in equipment, left the company with a mere $6.9 million of cash at the end of the year. The nickel price has continued to fall since those accounts were published and it's nearly certain that the company's finances have deteriorated further. Palmer released a statement on Wednesday saying the company was experiencing a "small deficit in cash flow". The Palmer empire has something of a reputation for inter-company loans, many of which have been provided by Queensland Nickel. For example, a small but non-producing and loss-making public company controlled by Palmer, Australasian Resources, told the Australian Securities Exchange in 2015 it would have the support of the major shareholder for working capital, adding it had also acquired a letter of support from Queensland Nickel, pledging to support the company with the required financial support to enable it to meet its expenditure commitments.

Pitt said this week he had urged Palmer to use his broader wealth and broader business empire to ensure the nickel facility continued to operate. Value would be debatable But it might not be that simple. Palmer's flagship company, Mineralogy, reportedly has less than $500,000 in cash, with its primary assets being mineral rights, whose value would be debatable in the current low-commodity-price environment. It relies on royalties from CITIC as its primary source of income – the payment of most of which remains embroiled in legal dispute. There is plenty at stake for Palmer, who, despite his cash flow crisis, is reportedly unwilling to engage with potential buyers of his Queensland resort to garner funds to prop up other parts of the struggling empire.

The ripple effect of the closure of the nickel refinery will be particularly felt by the small New Caledonian economy, which, as the main supplier of laterite ore to Queensland Nickel, would lose $152 million in export dollars.