why share weakness?, page-6

Thanks for your interest. I bought into ALD about 6 years ago and so (average about A$30c) which after the 6:1 consolidation leaves me substantially in profit even at current prices. However, like any investor I would sell if I didn't feel that there were prospects of further substantial gains. As you will appreciate it is as well to buy (or hold)a share whilst it is down and wait for better days. In the case of ALD:

1. I feel that the problems at Simberi cannot go on for ever (I may be wrong on this). Whilst the ore is marginal grade this was also the case at Lihir for their oxide ores but this allowed them to develop to processing the sulphide ores where the grade was far better - this is the same position for ALD
2. All the pits are open pits and the ore is widely dispursed (i.e not nuggetty). There is also little overburden and the ore is powdery (i.e little grinding required)which allows ALD to get at the gold cheaply and potentially extract the gold cheaply. The widely dispursed nature of the ore should mean no surprises in terms on the ore not being there. Also disposal of tailing is to the ocean which is cheap (but some question it from an evironmental perspective)
3. Whilst I feel that ALD's cut off grade (.5g/ton) is too low there is still a substantial amount of oxide ore which should yield cash flow (along with a further capital raising) to process the sulphide ores. This is when the pay off should come since is seems (and this is supported by Lihir) is where a large deposit may well be with reasonable grades. Using an autoclave to oxidize the sulpide ores is costly in terms of fuel however going to HFO should keep the costs down (not unfortunately as low as Lihir who use geothermal energy from the dormant volcano they sit on).
4. I feel that ALD should have learnt from their mistakes and now have a reasonable stockpile (to ensure against rain). The debottlenecking, commissioning etc should be over. Hopefully the landowners should not create too much trouble (this is a big risk in PNG) and ALD learnt something about duplicating essential equipment (i.e ballmills)and keeping a close eye on contamination leaks from leaching tanks. I'm sure there will be other problems but it is as well to have the problems whilst they are profitable.

In summary I feel that ALD is cheap due to their past problems but has substantial long term potential once they can show some runs on the board regarding sustainable production from Simberi (particularly using high grade sulphide ores)and get their cost down to about $600 to $700/oz I also think Gold Ridge has potential and also spreads the risk. Also having consolidated their shares to the LSE and being in the LSE250 should mean their shares should be fairly liquid and I can take profits once they get up to about A$5 - A$6 per share.