smhMining promoters do battle for goldEmail Print Normal font...

smh

Mining promoters do battle for gold
Email Print Normal font Large font AdvertisementFebruary 15, 2008
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While the yellow metal rides high, a couple of stumbles make new projects so much harder.

IT ISN'T easy promoting a West Australian gold company these days.

Despite high gold prices, last week's collapse of View Resources - and the earlier capitulations of Gleneagle Gold, Croesus Mining and Sons of Gwalia - have left some investors wary of the state's gold sector.

Apex Minerals and Monarch Gold, backed by some mining industry heavyweights, are trying to buck the trend.

The managing director of Apex, Mark Ashley, has kicked off a three-week tour of Asia, Europe and the US to promote his company before the company seeks $55 million in financing for its Wiluna project.

Apex has yet to decide on the format of the financing package needed to get Wiluna back into production by the end of the year.

The Wiluna plant could produce 150,000 ounces of gold next year through blending lower-grade Wiluna ore with ore from two other higher-grade deposits within trucking distance.

Apex forecasts its costs at about 550 Australian dollars an ounce and does not plan forward sales of its gold, although it could take out some put options.

Meanwhile, Michael Kiernan's Monarch Gold is expected to emerge from a nine-day trading suspension after seeking to raise about $10 million through a bookbuild, down from an earlier target of up to $25 million. The initial disappointing performance of Monarch's Davyhurst operations left it with only $1.45 million at the end of the last quarter.

Kiernan admits it is tough to raise money these days, and within three months he is going to have to hit up the Canadian market for a lot more to fund Monarch's $65 million acquisition of Harmony Gold's Hill 50 mine. He says Davyhurst should be cash flow-positive by next month and Monarch should produce 130,000 ounces at a cost of $650 an ounce during the next financial year.