another glowing report just out

Just out today and worth a read for all CRS followers:

"12/26 01:53
Croesus Thrives on Rivals' Discarded Mines, Takeovers (Update1)
By Dudley White


Kalgoorlie, Australia, Dec. 26 (Bloomberg) -- Croesus Mining NL can thank its bigger rivals for helping Australia's third- largest gold producer become the best performer on the nation's benchmark stock index this year.

The company bought WMC Ltd.'s 50.5 percent-owned Central Norseman Gold Corp. mine for A$80.5 million ($45.2 million) in January, allowing it to increase output fourfold. This year's $4.7 billion of takeovers in the industry left investors with fewer Australian gold stocks to buy.

As a result, shares in Kalgoorlie-based Croesus tripled this year as the price of bullion surged by a quarter and Managing Director Michael Ivey cut costs by 25 percent.

``We still see a lot more potential in cutting costs,'' said Gary Armor, who helps manage $560 million at AMP Henderson Global Investors in Sydney, including 7.9 percent of Croesus. ``It's big- company syndrome versus small-company syndrome. When you're a small company, it's easier to focus on the things that matter.''

The gain in Croesus shares this year came as Australia's benchmark S&P/ASX 200 Index fell 11.4 percent. The surge was helped by a 23 percent climb in gold prices to 5 1/2-year highs as stocks fell and concern about a U.S.-led attack on Iraq spurred demand.

Gold for February delivery fell $1.60 to $345.70 an ounce on the Comex division of the New York Mercantile Exchange at 9:36 a.m. Singapore time. On Tuesday, it rose to its highest closing price for a most-active contract since May 1997.

The acquisition of Central Norseman, Australia's longest continuously operating gold mine, probably boosted Croesus's gold production to between 280,000 and 290,000 ounces in 2002 from 75,000 in 2001, Croesus' Ivey said in an interview.

Newmont, Placer

That would rank the company behind Newcrest Mining Ltd. and Sons of Gwalia Ltd. as Australia's No. 3 gold miner. Newmont Mining Corp.'s $2.76 billion acquisition of Normandy Mining Ltd. in January and Placer Dome Inc.'s $1.05 billion buyout of AurionGold Ltd. placed the country's former top two gold mining companies under overseas ownership.

The Australian dollar's 12 percent decline against its U.S. counterpart in the past three years, along with gold producers' forecasts of higher prices, tempted North American gold miners to buy the biggest local companies. Croesus's market value has jumped to A$256 million from A$31 million at the beginning of the year as its stock surged and the company issued 175 million shares as part of the Norseman acquisition.

``There's not many of us left,'' Ivey said. ``The cheap Australian dollar helps the overseas companies, and they all seem to have decided at one time that they need to get bigger and get bigger fast.''

The Croesus habit of acquiring mines from bigger rivals began at the company's inception. Chairman Ron Manners sold shares in the company for the first time in July 1986, raising A$2.6 million. The following year the company bought Forrest Gold Pty. from CRA Ltd., one of the two companies that formed Rio Tinto Group in 1995, for A$20.3 million.

`Lot More Value'

Manners founded Croesus with two employees. Today it has 200 workers. Its shares closed Dec. 24 at 84 cents, up from 28.5 cents at the end of 2001, and some investors expect further gains.

``We wouldn't still be at more than 7 percent if we didn't see more than A$1 in it,'' AMP's Armor said. ``We see quite a lot more value.''

Croesus cut about A$100 an ounce from gold production costs at Norseman in the first six months after the acquisition, Ivey said. The buyout helped Croesus report pretax profit of A$15 million in the fiscal year ended June 30, compared with a loss of A$2 million a year earlier.

``It's doing what a gold mine should do -- it's generating lots of cash,'' said Paul Carter, associate director at Perth- based brokerage Paterson Ord Minnett. ``No one really knew Central Norseman because it was hidden in WMC for so long. Now it's out, and everyone can see it's got quite a good set of legs.''

Still, analysts said the company needs to find more gold to extend Norseman's lifespan. Otherwise, they said, further gains may be limited. Croesus is due to report the results of its exploration program in early 2003.

Merrill Lynch, AMP

``There is a reasonable amount riding on this,'' said David Radclyffe, senior gold analyst at Aegis Equities Research in Sydney. ``What the market really wants to see for Croesus is a bigger resource profile so they can be confident there's a good few years of life still there.''

If the report shows Croesus has enough gold reserves, more institutional investors may join AMP and Merrill Lynch & Co.'s Gold & General Fund in holding the stock, Ivey said. That may force Ivey, a former geologist, to cut back his three trips a month to Croesus's Western Australian mines.

``We've gone from 4,000 shareholders to 10,000, and there's a reasonable amount of work in that,'' Ivey said. ``Every week I used to be on site. Now I just take brokers out and point at colored maps.''