re: Ann: NGF: Takeover Offer for Kalgoorlie M...
Hello SeekingAlpha, good to hear from you.
I agree with you.
The new Chinese board and takeover of Norton (NGF), is far superior to the former Australian and South African board of NGF. For one thing, they are paying themselves 300% or 400% less.
The former board would have bled Norton dry, like bloodied leeches, and then let it die, moving on to their next feeding ground.
Directors like that, remind me of "The Wraith" in StarGate Atlantis (who suck the life-force out of humans until they die, and then move on to their next kill).
I now believe, given the current Gold trading environment, that the directors of KMC did the right thing in recommending a sell to Norton.
Norton have made no secret of the fact that they are growing and expanding, which is a good strategy (if you have the finances) at a time when gold projects are cheap. The Chinese are excellent business people, and contrarian investors, and gold obsessed.
I think that Norton may pick up some Barrick or Alacer properties that are up for sale near Kalgoorlie, but I am not sure how they will pay for them. I have emailed the Chinese directors of NGF regarding this question, but I do not expect a response.
Perhaps Zijin will negotiate with a Chinese bank, or a combination of this and a Capital Raising will take place, or a new Cornerstone investor will emerge. The Barrick and Alacer properties are not going to be cheap, because they have the Gold, it is just that Australia is a very expensive place to operate because of the wages being paid. The good company AZS have highlighted this, because they operate in Mexico for Gold and Copper, and have stated that a Metallurgist (fully qualified and experienced) in Mexico costs 4 times "Less" than in Australia. And grunt workers can sometimes cost "Ten" times less. You can see why Mexican and African explorers are getting the attention. Yet they are still good wages in those places.
Anyway, the next moves by Norton will be interesting. The new Chinese MD/CEO of Norton worked as a Geologist for Barrick for 7 or 8 years I believe, so I expect they will pick up a Barrick property or two. I just hope that Norton do not have to issue another 500 million shares to do so.
The Chinese have a very interesting vehicle here in Norton, and Zijin have said that they have no problem with diluting their control down to less than 80% because of takeovers and JV's. This will provide some liquidity, the truth is however, that the liquidity will only come from the 20% Non-Zijin ownership, which is a good thing really. I like this, because in a virtual sense, it means that Norton really have "virtually" only 200 million shares on issue (because you can discount all the Zijin shares, they will never come into play).
The one thing that Norton's Chinese backers have no problem with is finance, Zijing is China's biggest Gold producer, and I think they own a bank or two themselves. So Norton will never go under, not as long as there is Gold around Kalgoorlie anyway. This gives you security, something you can not get at the moment with many other ASX small-cap gold companies.
I am not sure the NGF share price will ever soar, but it might just steadily increase, into the 30's and hopefully the 40 cent range eventually.
Given the current environment, the KMC directors did the right thing. Over the long term though, well, who can tell?
For the moment, we should support NGF, especially if they buy another producing Barrick or Alacer gold mine out of Chinese capital (rather than shareholder dilution).
Cheers Gw
When a true genius appears in the world, You may know him by this sign, That the dunces are all in confederacy against him. (Jonathan Swift) (also see: "A Confederacy of Dunces", a novel by John Kennedy Toole)
KMC Price at posting:
0.4¢ Sentiment: None Disclosure: Held
