re: attn: wrongway--a query
Thanks wrongway--just interested because my thoughts are that they will write down their gold assets and concentrate fully on the minerals business. Could be a play after all the mess is sorted.
bit of info for those interested...
Thursday July 29, 8:01 AM Australia's Gwalia Expects To Avoid Arbitration On Deal
(This article first issued Wednesday evening)
KALGOORLIE, Australia (Dow Jones)--The head Australia's Sons of Gwalia Ltd. (SGW.AU) said Wednesday he expects the company will avoid arbitration with its biggest tantalum customer, U.S.-based Cabot Corp. (CBT).
"We've made an application to go to arbitration, but that's not a binding situation," said John Leevers, managing director and CEO of Gwalia, on the sidelines of the annual Diggers and Dealers mining forum.
The two companies have been trying to negotiate a new contract since last August, with the current million pound-plus deal between them set to expire in December.
"We will continue negotiation with Cabot in good faith, and if it works, it works, and if it doesn't, we'll go to arbitration," he said.
A final decision should be made over the next two months, Leevers said, adding that he foresees a resolution with Cabot.
"I expect not to go to arbitration," he said.
Gwalia, which sold about 2.1 million pounds of tantalum in the fiscal year ended June 30, expects to boost that figure to 2.3 million lbs in 2004-05.
While analysts have speculated that Cabot may wish to cut volumes on its deal, Gwalia believes the market for tantalum, used primarily by the electronics industry in capacitors, is strong and improving, Leevers said.
H.C. Starck, the company's second biggest customer and a unit of Germany's Bayer AG (BAY), has already agreed to buy a minimum 800,000 pounds of tantalum per year for the calendar years 2006 through 2008 on "similar" terms to an existing deal.
"I think you've got to understand that our current contract prices were struck in 2000, when the market was booming. They weren't unrealistic prices at the time, but they were very good prices," Leevers said.
Leevers said Gwalia's multi-year contracted prices were "well above" the last recorded spot transaction out of Ethiopia at US$38.50/lb of tantalum.
"What we don't want to see is what happened in 2000, when the market spiked very violently and prices took off," he said. "The end result of that was that the end users of tantalum capacitors chose to design tantalum out of their machinery, (and) that doesn't help us very much at all," Leevers added.
Gwalia thus views volume as the key driver of its business, with the aim of "having stable pricing and having a market that knows that it can look forward to stable pricing going forward."
The company, which also produced 521,000 ounces of gold in the last fiscal year, is currently conducting a strategic review of its operations, the results of which will be unveiled in late August.
Recently, Australia's Paterson Securities said the review might include a A$150 million writedown of the company's gold mines.
Asked to comment, Leevers would only say that "there's a fair chance there will be a degree of asset adjustment."
SGW Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
