re: Ann: NGF raises $40.5m at 32.83 cents per...
harba
If they can use the $40m raised to buy back the convertible notes then the capital raising would be fairly neutral in terms of share dilution.
However, I have a bad feeling about this. They do not really have a clear plan for what the money will be used. It seems that their trip overseas made it plain to other investors that NGF was a bargain so they said I also want in at bargain basement prices.
If you have been reading the NGF forum you will know that I have been supportive of NGF. However, that does not make me blind to some of the negatives, such as:
1. CN notes were at a high interest rate and give the note holders the right to convert at their timeframe. NGF should have had the right to buy them back at the end of the period, or earlier;
2. The hedge was done at too low a price in terms of the AUD POG;
3. Massive production cost blow out compared to what Barrick was able to achieve;
4. 2009-10 production shortfall of 25,000 ounces prpobably due to poor planning.
5. Balamel gold deposit purchase was a dud and has resulted in share dilution;
6. Slow to re-act to production cost blow out;
7. A lack of expertise in gold mining/management, but this seems to be improving.
8. Over-reliance on contractors who do not really have a strong interest in cost containment - some improvement shown here.
What NGF's management has done right is to buy the paddington mine on the cheap from Barrick, which has a history of underperformance and poor exploration effort. I suspect there is a lot more gold to be found underground, if NGF restarts its exploration program. Also, NGF has learned from its mistakes and is improving.
However, I am not convinced that the management are hot shot dealmakers, they were just lucky in getting the mine. Hence my concern about what they will do with the $40 million from the capital raising.
I still think there is considerable upside in NGF over the next 3 years, just not as much as before this latest deal.
loki
2.
NGF Price at posting:
34.0¢ Sentiment: Hold Disclosure: Held
