From today's Sydney Morning herald:
Struggling to deliver
Unlike Integra, Monarch Gold's aim was always to get into production as soon as possible to build an ambitious 500,000 ounce a year producer under the leadership of the chairman Michael Kiernan, who made his name as a manganese miner. His strategy was to consolidate old, unloved assets and blend high-grade and low-grade ore to keep costs down to reasonable levels.
But so far things have not panned out as planned, and it produced just 6500 ounces during the March quarter.
As Cairns notes, goldmines usually close for a reason, and while the gold price has risen, so have costs. Monarch hopes to keep its cash costs below $700 an ounce, which is on the higher end of the curve.
Monarch has borrowed millions of dollars from other companies in Kiernan's empire, such as Territory Resources and India Resources, and Territory has taken a 19 per cent stake in a failed attempt to shore up the goldminer's share price while it conducted capital raisings.
In the March quarter Monarch borrowed $15 million from Territory and had only $630,000 left in the bank before a rights issue last month. It also owes money to India Resources and was cash-flow negative to the tune of $15.5 million.
Kiernan acknowledged there was a "lack of confidence in the company" since it hadn't met its glowing forecasts. He said Monarch hoped to produce 7200 ounces this month to break even for the first time.
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