The Rudd government's proposed resource rent tax has been blamed for investors shying away from the $76 million float of Mungana Goldmines, the new company that will pick up the running on Kagara's north Queensland gold assets.
The float got under way amid the uncertainty caused by the tax debate and has managed to attract only $56.5 million. To get under way, it has relied heavily on Asian rather than the traditional European or North American groups for the funds.
The Kagara executive chairman, Kim Robinson, said sufficient funds had been raised to ensure that Mungana would have adequate working capital.
Advertisement: Story continues belowHe said the shortfall from the maximum $76 million that could have been raised was a ''direct result of the Rudd government's disastrous resources tax proposal''.
He said the tax could inflict great harm not only on the mining industry but on Australia in general.
"There is no doubt that institutional investors, both within Australia and overseas, are shying away from Australian projects and the companies which own them as a result of the federal government's absurd tax grab," he said.
"The simple fact is that Australian mining projects, which employ Australian workers and underpin the living standards of working families around the country, are now far less attractive to investors than so many of their overseas competitors.''
The float involved the issue of 59.5 million shares at 95 each. Mungana has an inferred resource of 1.85 million ounces of gold and is planning to reach annual production of 150,000 ounces of gold, and 60,000 tonnes of copper concentrates.
Kagara holds 62.1 per cent of Mungana, China's Guangdong Foreign Trade Group, state-owned, has 16 per cent and Prosperity Steel United Singapore has 8.3 per cent.
KZL Price at posting:
57.0¢ Sentiment: Buy Disclosure: Held
