major project right up royal falcon's alley?

Great opportunity IMO for Royal Falcon (GMR 35%, Royal Group 65%) to access an advanced gold mining project in Mali which has the potential for resource upgrades and near term mining prospects:

Disconnect between Glencar share price and gold cannot last forever

By Pat Boyle

Thursday July 09 2009

GLENCAR shareholders now face a longer wait as the company embarks on the search for a new development plan for its gold prospect on Mali.

This week the company terminated talks with Gold Fields on a proposed joint venture for the Komana gold prospect in Mali after they were unable to agree the final terms on the deal.

The terms on the table would have allowed Gold Fields to earn a 65pc interest in the Komana project through funding a $32m exploration and development programme.

As part of the initial, non-binding agreement, Glencar raised £1.2m (€1.39m) through a share placing with Gold Fields.

However, not all Glencar shareholders backed the plan, notably Macquarie Bank, an investor with a wide range of resource-related interests.

Campaign

Macquarie actively campaigned against acceptance of the offer, leading eventually to the withdrawal of motions which would have allowed it to proceed.

The Gold Fields deal was being negotiated in the face of the refusal by Macquarie Bank to provide further funding for Glencar other than by way of a very large discounted share deal. Glencar directors maintained this would have involved substantial dilution for other shareholders.

The board is now looking at alternative development plans, including independent financing and possible mergers with other companies, it said this week.

According to stockbroker Davy, the Komana project is shaping up to be an economically sound mine. As of June 2008, Glencar had discovered 1.25 million ounces of gold at Komana and expects that further drilling will increase this reserve figures.

If this does turn out to be the case, then the delay caused by the breakdown of the Gold Fields talks may not be that disastrous.

Problem

The problem for frustrated shareholders is that, in the meantime, the share price has been the big looser.

On the day it announced the termination of the Gold Fields talks this week the share price fell 14pc and it shed another 10pc yesterday, trading under 5c.

This time last year the shares were trading at twice this level, two years ago they were pegged at 16c.

For shareholders this has been a painful process. Despite the good work being done in Mali and the huge gains on the gold markets, Glencar's stock has been heading in the opposite direction.

Assuming the board can come up with the goods, the disconnect between Glencar's stock price and the underlying gold price can hardly last for ever. Assuming that we have reached or are close to the bottom, then there is only one way to go.

http://www.independent.ie/business/irish/disconnect-between-glencar-share-price-and-gold-cannot-last-forever-1813430.html

JB