Vatukoula Gold Mines Finally Gets Its Fundraising Away And Will Now Work Towards Doubling Gold Production
By Alastair Ford
minesite.com
“We’ve had some fun and games”, says Dave Paxton of Vatukoula Gold Mines, with a slight hint of relief in his voice. When Minesite rings him up and leaves a message after news of Vatukoula’s most recent fundraising comes through, Dave phones back pretty sharpish. This is partly, no doubt, because he wants to talk up the additional potential that Vatukoula now offers investors, given that it has a further £3.8 million in working capital to further develop its operating flagship gold mine in Fiji. But it’s also, as he candidly admits, because he’d quite like to put behind him all the corporate shenanigans that raising the money in London has involved. Shareholders past and present have by turns thrown up roadblocks and helped the fundraising on through. Dave Paxton would still like a bit more money for a fully comprehensive refurbishment of the Vatukoula operations. But what he’d like even more is to be able to get back down on the ground, and focused on operating a mine.
Perhaps it was never going to be simple running a company that Dave Lenigas is involved in. But to be fair, it wasn’t big Dave that blocked Dave Paxton’s plans. Rather it was a Canadian investor called Walter Berukoff, a man who, according to his own corporate material “has built a solid reputation as a mining entrepreneur”. Perhaps we’re being overly cynical here on Minesite, but it always looks slightly odd when one person tries to tell another what his or her reputation is. Track record, yes. Reputation? – that’s for markets to decide, surely? Still, considering that he boasts the likes of American Eagle, Miramar Mining, Northern Orion and La Mancha Resources on his CV, no one can deny Mr Berukoff any claims he might make to experience in these markets. Experience he has in spades. And at the crucial moment something else he also had in spades was shares in Vatukoula.
So when he effectively blocked a fundraising by Vatukoula back in March, you could be sure that the matter wouldn’t end there. Vatukoula, as Dave Paxton freely admits, was fairly desperate for cash. “They could see that we were on our knees”, he says. “It was really opportunistic”. For a moment, it seemed like Mr Berukoff, either through lawyers Atlantic Law, or through his corporate parent entity Red Lion, might mount a full-scale bid for Vatukoula. After all, at one stage Red Lion itself owned the Vatukoula mine in Fiji, before passing it, via Dave Lenigas, onto what was formerly known as River Diamonds, and what is now known as Vatukoula Gold Mines. This is a tangled and twisted web, and you can see why Dave Paxton, who, although he brings plenty of mining and City experience to bear, has only actually been involved with Vatukoula at board level for a short period of time, might be getting heartily sick of it.
But having said that, Dave took on the role of chief executive with his eyes open. Vatukoula’s mine is a high cost project that needs a bit of investment, but Dave’s always said he thinks Vatukoula can make a real go of it. Currently the operation is running at breakeven, but with the new money the plan is to take production up from 2,500 ounces per month to an initial 4,000 ounces per month, and then eventually up to around 8,000 ounces. Most of the costs are fixed, so revenues from additional production should feed straight down on to the bottom line. That’s the theory, anyway. But there’s a lot of real and hard work that needs to be done to get there. In particular, Dave would like to buy 10 trucks, on the simple grounds that each new truck ought to be able to ship an extra 80 tonnes of ore grading 10 grammes per tonne per day. Add that up, and you begin to see where the production increases are coming from. Buyers are even now off down in Australia scouting around mothballed equipment that’s lurking on moribund nickel projects, and searching in other of mining’s nooks and crannies for possible bargains.
Meanwhile, having blocked one discounted raising, Mr Berukoff appears to have secured an exit on slightly more favourable terms, courtesy of one-time Minesite subscriber Canadian Zinc. The boys at Canadian Zinc, are “old friends” of Dave Paxton’s, and have stated that they’ve come onto the register with a view to holding Vatukoula shares for the long term. So even if they have deliberately dropped off the Minesite radar as the value of their zinc assets disintegrates, we will at least be able to follow the fortunes of this new side of Canadian Zinc from close at hand. Certainly, holding Vatukoula for the long term is probably the best idea, given the recent track record. There have been upticks here and there, not least on the latest fundraising, and plenty of volatility around Mr Berukoff’s comings and goings, but over the last 12 months Vatukoula’s shares have lost two thirds of their value. And that in a time when the gold price has been soaring. Dave Paxton has come on board to turn that around. With a fair wind, and a successful ramp up of production, he might just succeed, now that he’s got some money to play with. Let’s just hope the gold price holds up. |
