http://www.theaustralian.com.au/business/wealth/gold-still-a-magn...

http://www.theaustralian.com.au/business/wealth/gold-still-a-magnet-for-investors-ggg-resources-plc/story-e6frgac6-1225996390031

THE gold price reached record highs of US$1431/oz during 2010, marking the yellow metal's 10th consecutive year of uninterrupted gains.
COMPANY: GGG Resources Plc

ASX CODE: GGB

SHARES ON OFFER: 22.5 million

LISTING PRICE: 40c

PROPOSED LISTING DATE: February 11

MARKET CAPITALISATION: $67m

During this long-running bull market, it was the sixth year in which the metal has risen more than 20 per cent. As gold equities are typically twice as volatile as the underlying metal, the macroeconomic environment was therefore very favourable for investors in the sector.

Gold-focused companies accounted for one-fifth of the top 50 performing stocks on the ASX, and these strong share price gains continue to underpin a healthy frequency of precious metal orientated IPOs. GGG Resources is the latest such float to grace the ASX. The Britain-based explorer is seeking a local listing following its acquisition of a 50 per cent stake in the Bullabulling gold project in Western Australia.

Located in the state's eastern goldfields near Kalgoorlie, Bullabulling has a long history of intermittent exploration and mining dating back to 1893. Old workings have been sufficient for GGG Resources and its Joint Venture (JV) partner, Auzex Resources (ASX: AZX), to delineate a two million-ounce "inferred" resource across the project. Auzex Resources aims to establish a minable reserve of at least 1.25 million ounces by March, from which the JV partners will assess mining feasibility.

Proceeds raised from GGG Resources local listing are destined for these feasibility works and ongoing drilling at Bullabulling. The project's existing resource base underpins GGG Resources float valuation around $50/oz, which is also consistent with Auzex Resources' market value.

For float investors, resource upgrades and details regarding development economics offer the most likely share price drivers, although production is at least another two years away.

In the interim, GGG Resources and Auzex Resources aim to simplify the project's ownership structure by pursuing consolidation opportunities. A merger of the two companies post-listing is a possibility, with a tie-up likely to accelerate development and deliver economies of scale.