Robin Bromby From: The Australian January 27, 2010 1:51PM ?
YOU can see the problem for Gryphon Minerals, which announced this morning it is spinning off its non-core West Australian assets into a new listed company, Renaissance Minerals. It has its hands full with the Banfora gold project in Burkina Faso which certainly has all the potential to be a company-maker. But, as Keith Goode of Eagle Research said in a report on Gryphon, the company still has its gold and nickel prospects on which it floated in 2004. Its Mulgabbie project in the Eastern Goldfields, covering 2500sqkm, is in the vicinity of the Carosue Dam mine, recently re-opened by Saracen Mineral Holdings. These assets, writes Goode, appear to be currently valued at close to zero by the market.
So, in the absence of such recognition, Gryphon has taken the step that most others do in these circumstances - it has gone for the spin-off. More rats-and-mice assets in another new rats-and-mice junior, of which we already have a surfeit. Gryphons timing, however, may not be great: the way the market is looking over the past few days (and the largely unnoticed slump in Chinese and Japanese stocks) may make a new IPO a very uphill battle.
Pure Speculations question: is the issue really that urgent that GRY couldnt just hold these other assets, then have them as a second string when Banfora is up and running? Wouldnt that be a better long term strategy that flogging these off, then paying top dollar for other projects in the future?
Apart from that, Goode was very upbeat about Banfora, with a target price of 70c (against this mornings 47c). He was impressed by Burkina Faso. It was a surprise in terms of cleanliness and road quality - vehicles can travel at 120km/h between the major towns, which is virtually unheard of in West and Central Africa, he wrote.
Banfora has the four key attributes for a gold project in his view. They are infrastructure (main road access), power (hydropower is available), water and there are no artisanal villages on or close to the projects.
