continue as a going concern

Afternoon all,

http://au.news.yahoo.com/thewest/business/a/-/wa/10393310/crescent-audit-warning-set-to-test-focus/

Crescent Gold's auditors have questioned the loss-making miner's ability to "continue as a going concern" at a time of near-record gold prices, highlighting the challenge awaiting takeover suitor Focus Minerals.

Crescent's annual report, released yesterday, shows the gold miner bled $53.9 million at its underperforming Laverton operations, leaving it with just $11.5 million in cash at June 30.

Crescent pocketed $115.3 million in revenue for the 85,579 ounces produced in the year.

However, mining and processing costs of $122.3 million eroded any gains from a bullion price that is trading near all-time highs.

Crescent does not reveal its cash costs. Based on its profit and loss statements, the Laverton operations were producing ounces at a cost of $1429 each, compared with a realised sales price of $1347/oz.

Crescent reported a net loss of $51.1 million for the year, up from an $8.7 million deficit in 2009-10 when its realised gold sales price was higher than its cash costs.

Deloitte audit partner Darren Hall, who signed off on Crescent's 2010-11 accounts, pointed to the full-year loss and the operating cash outflow and said it indicated "the existence of material uncertainty which may cast significant doubt about the ability of the consolidated entity and the company to continue as a going concern".

Although qualified audit sign-offs are not uncommon, it is rare in a sector that is enjoying soaring commodity prices.

The annual report is likely to be Crescent's last.

Focus, which surprised many investors when it launched its friendly scrip-swap offer for Crescent in June, controls 80.5 per cent of the target before tomorrow's final takeover acceptance deadline.

Focus managing director Campbell Baird has expressed confidence his team will be able to turn around Crescent's performance, which is based on mining ore from several open pits and trucking it to Barrick Gold's nearby Granny Smith operation for toll processing.

But the fact that Focus is struggling to keep a lid on costs at its Coolgardie operations - in the past year cash costs for the 72,803oz were $877/oz and $981/oz, resulting in a 30 per cent fall in full-year net profit to $7.6 million - has raised concerns among some Focus investors that Crescent may be too much of a burden for their company.

Crescent shares were unchanged at 5.3¢ and Focus steady at 6.1¢.

Focus' one-for-1.18 swap offer values Crescent shares at 5.2¢.