THE Punter cant remember when he was first seduced by the high grades of gold under the Tanami desert, but he has slowly gone grey waiting for a speculative outfit called Tanami Gold to make his fortune.
It could still happen. Maybe. Well, maybe not a fortune, but some real money.
Way back in 2006 Tanami (ASX code TAM) was, briefly, a stock market darling with shares soaring to 35c each. At the beginning of this year they were 8c.
Now the company is trying to raise nearly $64 million at a mere 1.5c a share.
The Punter, possibly proving he never learns by experience, bought 60,000 TAM shares on Friday at 2.7c each, a total cost of $1640.
The six-for-five rights issue will more than double the number of TAM shares, which will of course more than halve the value of each share.
Given that the shares were 4c before the issue was announced, the 1.5c price tag for the new shares is not that generous, and 2.7c looks positively expensive.
If the Punter takes up his entitlement before the offer closes on August 11, he will pay $1080 for a further 72,000 shares. That will bring his average cost down to 2.1c a share still more than half the pre-issue price.
But TAM is actually producing gold, at a rate of about 50,000 ounces a year at an average cost of about half the world gold price.
It aims to be producing 200,000 ounces a year within two years.
At the end of March it had nearly $10m in cash and gold.
The cash it is now seeking will provide working capital for the expansion and eliminate the debt it incurred when it bought additional prospective tenements and an existing gold processing plant not far from its original mines on the Northern Territory/ West Australian border.
The issue has been underwritten, so the company will get its money even if the share market goes to hell in a handbasket.
The Punter, of course, has rather a lot of gold shares already, some of which are doing very nicely (thank you, Integra Mining).
He likes to think of them as a hedge against global financial instability.
The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
