(garimpeiro)
The Age
Thursday August 29, 1996
US HUNTERS MAY HAVE ALREADY MISSED LIHIR BOAT.
THE runaway shareprice of Lihir Gold must be causing some headaches for the boys at Battle Mountain, with their plotting to move to full ownership of Niugini Mining.
Battle Mountain already owns 50.4 per cent of Niugini and in typical American style, has started discussions that might or might not lead to a bid for the rest of the company.
It might have missed the boat as earlier this week Lihir Gold confirmed that its mega-big gold project on Lihir island in Papua New Guinea was running well ahead of schedule.
That's real good news for Niugini, which owns 17.5 per cent of Lihir - 153.33 million Lihir shares plus 2.16 million options, which are well in the money with an exercise price of $1.
81.
Lihir shares have run up strongly on the better-than-forecast development program and closed yesterday at $2.53 a share.
That means the Lihir stake is now worth $3.30 a Niugini share.
Niugini's own share price has also been strong of late, rising to $3.65 on the strength of the Battle Mountain posturing and the confirming progress statement from Lihir.
Take the $3.30 for the Lihir shares and add in a cash-backing of 47 cents a share and you get a valuation for Niugini of $3.77, more or less in line with the market.
But that valuation ignores what value there is in Niugini's Red Dome (Queensland) and San Cristobal (Chile) operations.
In the June half they produced more than 100,000 ounces on a gold equivalent basis.
It also needs to be remembered that Niugini has been one of the better explorers in recent years, with its stake in Lihir reflecting its trail-blazing role at the project.
Adding in a value for existing operations and exploration potential gives a value for Niugini well north of its current market price.
The value argument can be taken further if the strategic importance of Niuguni's stake in Lihir is acknowledged.
RTZ currently calls the shots at the project but its stake is split with a Vengold out of Canada.
Niugini's 17 per cent holding represents a handy springboard for anyone contemplating a move to a controlling position in the Lihir project, the producer of more than 550,000 ounces of gold in 1998.
Niugini's job will be to ensure that Battle Mountain pays up for that greater value, assuming of course that Battle Mountain follows through with an offer.
LUSTRE GROWS IN GOLD.
THERE has been much good news from the Victorian gold industry in recent weeks.
The resource upgrade at Maldon by Alliance and the high- grade gold shoot found by Reef at Tarnagulla prove the point.
Adding to the flow this week is Australian Gold Development, the company intent on making a go of the gold and antimony found at Costerfield.
There is some way to go but the company provided enough encouragement for Garimpeiro to take note when it updated the resource estimate for Costerfield.
The identified resource - excluding pre-resource mineralisation - stands at 750,000 tonnes at an equivalent gold grade of 7.5 grams of gold a tonne (180,000 ounces). That's getting up to the size of resource the market takes seriously when it is reported out of Western Australia. The grade is already there by a long shot.
The trick at Costerfield is, and always has been, to make the antimony pay in the separation process. Antimony is high- value stuff but getting that full value has stumped others in the past.
Aussie Gold reckons it has the answer, with pilot plant tests indicating gold recoveries of 80 per cent and antimony recoveries of more than 90 per cent from the sulphide ore.
A starter plant is to be designed, constructed and on site before the end of the year to fine-tune the process with a view to moving up to operations of a commercial scale.
In the meantime, the group's resource upgrade also means that continuing gold production from the conventional treatment of oxide ores (900 ounces a month) has at least two years' reserves ahead of it.
MAPLE ALL SYSTEMS GO.
MARK Crosling's plan to fast-track the growth of his Maple Oil is taking shape with its $30 million deal to acquire a 40 per cent stake in the Inland oilfield.
The risk in financing the April deal has been removed with Johnson Taylor's underwriting of a $14.6 million rights issue to provide the equity.
It should not be a hard sell as the deal transforms Maple.
Forecasts for 1998 show revenue of $20.4 million, a net profit of $7 million and earnings per share of 3.9 cents.
TOP ONSHORE OIL PRODUCERS
. Area/Field Operator Basin BOPD
1 Cooper Santos Cooper Eromanga 12,747
2 Naccowlah Block Santos Cooper Eromanga 5397
3 Mereenie Santos Amadeus 2953
4 Non-Naccowlah Santos Cooper Eromanga 2490
. Block
5 Bodalla Block OCA Cooper Eromanga 2473
6 Tintaburra Santos Cooper Eromanga 1495
7 Inland Oil Field IOR/Maple Eromanga 1100
8 Nockatunga Block Santos Cooper Eromanga 626
9 Canning Santos Canning 419
10 Moonie Santos Surat 373
© 1996 The Age
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