alacer and fml?? australian newspaper

For those who haven't seen it here is a copy of what's in todays Australian newspaper.

Costs see Alacer eager to offload

by:Barry FitzGerald
From:The Australian
June 14, 201312:00AM

Source: The Australian


DENVER-BASED Alacer has added its name to the list of foreign operators to be turned off by high operating costs in the Australian gold scene, with the Toronto and ASX-listed group revealing it is now entertaining offers for the two struggling mines it owns to the south of Kalgoorlie in Western Australia.

The move comes as Canadian gold giant Barrick is in the process of finding buyers for three of its lesser goldmines in WA, prompting claims by industry observers that the global industry has become so rattled by the record fall in gold prices in April -- and the subsequent desertion of investor support -- that the era of multinational gold producers is over.

The exit by Alacer, though, has been well flagged. It has cited the slump in gold prices, the impact of the carbon tax on diesel fuel costs, and high labour and equipment charges as raising the cost of producing gold in Australia.

Not all foreign groups are beating a retreat. It is a purely Western phenomenon, with Chinese producers more than ready to capitalise on the distressed prices and low competition for gold assets both in Australia and overseas.

Two Chinese groups that have already taken up positions in WA's Eastern goldfields -- Shandong Gold and Zijin Mining -- were the names most mentioned in relation to Alacer's planned sale.

Shandong owns 49 per cent of the cashed-up Kalgoorlie gold producer Focus Minerals, while Zijin now controls the operator of the Paddington gold project near Kalgoorlie, Norton Gold Fields.

Given the planned sales by Alacer, the experience for the group's mainly North American investor base has been miserable.

The group was only created in 2010, through the $2 billion merger of the ASX-listed Avoca and the Canadian-listed Anatolia. Avoca brought the two mines now up for sale to the marriage, while Anatolia contributed the Copler mine in Turkey.

While Copler has gone on to be a success for the company, the Higginsville and South Kalgoorlie operations have caused headaches. In March, Alacer took a $490 million impairment charge on the two operations, reducing their combined book value to $580m. Alacer is expected to receive a fraction of that in any sale, with analysts suggesting that while $200m would be a good outcome, $150m was more likely.

Credit Suisse said Focus could be a regional buyer of the assets up for sale. Canada's La Mancha, which has its ore from the Frogs Legs mine treated at Alacer's South Kalgoorlie mill, is considered the logical buyer of that operation. But it could get competition on that from the Zijin-controlled Norton.

Alacer chief executive David Quinlivan said the company had received confidential, non-binding expressions of interest from several parties interested in purchasing its Australian assets. "The sale of the Australian assets would enable the company to focus on its high-margin operations and exploration activities at its world-class Copler mine," he said.

He said the timing of any sale was uncertain. Alacer shares rose 18c to $2.55 on the news.

Hawk