"Kingsgate’s Bid Foray Gets It Well Out Of Kilter With Gold...

"Kingsgate’s Bid Foray Gets It Well Out Of Kilter With Gold Price.

By Our Man In Oz

When the price of gold goes up 12 per cent, and the price of a particular goldmining stock goes down 20 per cent over the same time frame you can say with confidence that the market is speaking loudly. Yelling, actually. The company being bawled out is Kingsgate Consolidated, an Australian miner with its best asset in Thailand. Since April 4 when Kingsgate shares hit an all-time high of A$6.80 it’s been a curiously steep dive down to the depths of A$5.43 on May 2. Signs of a recovery can be detected, but the share price slump has made for a very frustrating month for Kingsgate management for three reasons. First, is the painful comparison of the share price with the upward hike in the gold price from US$588 an ounce to US$661/oz between April 4 and May 2; second is the problem of Kingsgate having a share swap takeover bid active in the market for Argentinean gold explorer, Andean Resources; and third is the annoying feeling that normally sensible analysts and investors are simply not looking at the facts.

“Sometimes I think people just refuse to look and listen,” said Kingsgate chief executive, Gavin Thomas when Minesite caught up with him in Sydney. “This market move is awfully similar to what happened to us in 2004.” Back then, Kingsgate suffered a rash of rumours about production costs, expansion delays, permitting issues, and the possible need to sell down a slice of its rich Chatree mine. Today, it’s all happening again with the twin triggers being the release of a weaker-than-expected March quarter production report, and a devilishly clever defence being mounted by Andean against Kingsgate’s overtures – an excruciatingly painful process for Thomas who sits on both boards and who, naturally, excuses himself from any comment.

More forthcoming is the chairman of Kingsgate, Ross Smyth-Kirk who Minesite also hunted down, separately, given the delicate position of his managing director. Smyth-Kirk goes as far as accusing the Andean board of issuing statements that..."

Full article at http://www.minesite.com/storyFull5.php?storySeq=3492