new year, new debt restructure, page-7

I have to agree with Ajostu - this is a very disappointing result. I agree with Ajostu's views and feel that management has not addressed the real issues which are:

- getting the head grade up
- drastically reducing the costs to at least 3 figures

I really cannot understand why with the Gold Ridge head grade they can't get the costs down to a 3 figure amount with a new plant they have just spent $150m on. This company has only been saved by the PoG being at historically high levels.

At Simberi they have a problem with marginal oxide grades (for most Australian producers 1.08 gm/ton would be waste or marginal) but have spent a lot of money on capital equipment (e.g the aerial ropeway, sea tailings disposal etc) to process a lot of low grade dirt. The Simberi stripping ratio is low so they should be able to get the ore out cheaply. Maybe they have too many money men and ex politicians on the board with fat salaries and options. It has to be hoped Oelofse know what he is doing IMHO its clear the existing board have little idea given the current cost levels.

Over the gold loan it seems funny to me that the cash in a World Bank loan for the gold loan. WB loans are usually the best you can get (countries usually fall over themselves to get WB loans) and don't involve hedging. It is incomprehensible to me that they were not in a strong position - maybe they felt they needed the extra money for cash flow - if so this is bit of concern since it implies they don't really believe they are going to get their costs under control in the immediate future.

Seems to me the ALD has little chance of raising the money for the sulphides in the immediate future. They are looking to get into the sulphide in about 2015 - to do this they will need to get runs on the board for meeting forecasts of costs down to around $850/oz. The gold loan should be repaid over the next 3 years and all I would see is that about $100m would be forthcoming as a roll over loan on re-payment. In order to meet the date of 2015 for sulphides they will need much of this money for investment prior to production (I can't see that being viable until the gold loan is paid) which means the 2015 date is likely to slip. Even if they roll over the gold loan for $100m it means that a further dilution of about 20% (at current sp) will be required to meet the balance to get $200m as outlined in the feasibility report. It will be interesting to see what the estimate in the BFS. Their best option maybe to save capital by producing sulphide concentrate (in a floatation plant) and send this off to be smelted thus saving the cost of the autoclaves (and also the running cost of the fuel). The problem is that as they continue mining the current oxide resource the asset value of the company is going down and unless they upgrade oxide resources with more exploration their only way forward is with the sulphides - the cost of capital will only increase as they get more desperate for the money to exploit this resource. Hopefully they will find more (and higher grade) non refractory ores and .