new year, new debt restructure, page-6

Well the quarterlies are out and zog's comment about the Gold Ridge production have sadly not turned out to be correct. The Gold ridge numbers were appalling. The overall numbers for the year- pulling a 2.5c/share loss for the quarter and a 2.0c/share loss for the year- are, by any measure, dire and a huge pullback from last year.

About the only positive metric is the increase in gold-on-hand. I'm going to have to reread the thing several times to work out why the costs are so high and where all the money went.

It will be interesting to see if we ever get to a genuine net cash cost of $850/oz. At this stage it is not clear that, even with the plants going full steam, this will ever happen. Given the inability to get running costs into three figures, I really do wonder at the emphasis placed on the diesel to HF conversion, which will deliver a measly $30-50/oz. When you're at $1300/oz this doesn't seem like the biggest, but spending money on infrastructure seems to be the only thing management know how to do.

A few other comments:

- the general tenor of the report combined with Oelofse's appointment, seem to be saying "actually we didn't know what we were doing but hopefully now we do".

- the balance between expansion and profitability doesn't seem to be working. There's a lot of money that seems to have been spent without feeding into an improvement in the bottom line.

- If you sell 100koz at record prices and still can't make a fat profit then you've got a problem

- it's clear that the gold loan was made from a position of weakness not a position of strength. This wasn't clear to me at the time. It is now.

- if the gold price stays above $1600 the company will survive. If it goes to $2000 a multitude of sins will be covered up.

- I suspect that at the moment this is one of the world's least cost efficient producers.

So a statement of metrics we need to achieve

- net cost <$1000/oz
- consistent 40koz or better production per quarter.
- a clear profit of at least 4c/share.

Maybe then the management will deserve the fat options they've been giving themselves.

Our CEO/MD refers to "mixed fortunes" which I take as a euphemism for "bad management"

At the moment the share price isn't off by much, which leads me to believe that shareholders had anticipated the lousy performance, factored it into the share price, and aren't choking on their cornflakes. But I'm reminded of the classic performance appraisal:

"sets consistently low standards and fails to achieve them".