why share weakness?, page-4

I think weakness is essentially due to the company a questionable track record of getting control of its cost base. Around $800/oz was promised and now we see (they claim due to ball mill failure) to be around $1000/oz. Also if you look at their figures this cost does not include overheads and corporate costs which are extras. Thus the company is only viable due to the high price of gold and really must get its cost base under control if it is going to survive a (albeit large) downturn in the price of gold. Historically ALD have a bad track records due to problems with production whether it be issues (at Simberi) with commissioning, rain, landowners, ball mills, debottlenecking, upgrades etc. They are also likely to asking another capital raising (presumably a placement if they go to form) for the sulphide project.

ALD really need to get their house in order by getting some runs on the board to reduce per oz costs whilst the gold price is where it is and also get reliable production at forecast levels. So far the Gold ridge project has been doing well but it needs to get to steady state production and costs reduced. To reduce costs at gold ridge they need to get the grade up which requires opening up their new pit.

Simberi has been a disappointment but offers good prospects. ALD also have a track record in asking for capital via placements (they have a close relationship with brokers) and awarding directors generous (I feel too generous) share options.