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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (722)	8/21/2001 7:56:39 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Gold miners face tough new world afr.com Normandy Mining, Australia's biggest gold miner, warned yesterday of further industry rationalisation and unveiled plans to seek a US stockmarket listing after suffering its second successive annual loss. Large writedowns sent the miner into the red by $154.6 million, and its executive chairman, Mr Robert Champion de Crespigny, warned that a lack of grassroots exploration in Australia and the rush to access global capital provided enormous challenges for the future of the local industry. "There is only going to be a handful of producers left in the country soon and there are not many emerging producers," he told The Australian Financial Review. The warning follows the recent decision of another leading gold miner, WMC, to offload its $500 million gold assets. There has been widespread consolidation in the industry, with Goldfields and Delta Gold holding discussions on an $800 million merger, while the gold empire of Mr Joseph Gutnick has all but collapsed under a mountain of debt and massive hedging losses. "The Delta and Goldfields merger is a pity for the gold industry but it was probably inevitable," Mr de Crespigny said. Normandy yesterday flagged plans for a dual listing on the New York Stock Exchange in a bid to boost international interest in its shares and gain access to the lucrative US market, where 60 per cent of the world's gold companies are listed. The plan has prompted Normandy to cut its final dividend to focus on capital growth, in line with rival US gold stocks that rarely pay dividends. Melbourne mining consultants Surbiton Associates recently warned that the amount of gold production lost to mine closures in Australia would be greater than production from new discoveries next year. The latest Surbiton Associates quarterly survey showed a 1 per cent decline in Australian gold production for the year to June 30 after output in the June quarter dropped 3 per cent over the previous corresponding period. The weak gold price, which is hovering around $US270 an ounce, has forced many gold miners to abandon the search for new gold deposits and focused attention on costs. "In Australia, it is pure economics," Mr de Crespigny said. "You simply have to get the administrative costs down." The rush to consolidate locally comes as foreign companies, in the light of the weak $A, eye potential acquisitions in the Australian market. The world's largest gold miner, AngloGold, is one of four companies understood to have been short-listed by WMC as a buyer of its gold assets. Canada's Placer Dome, South Africa's Goldfields and the merged Barrick Homestake group are also frontrunners. "The issue is not so much what WMC can get but what value can be extracted from the assets under a different ownership," said Mr Peter Bacchus, a mining industry mergers and acquisitions specialist at Salomon Smith Barney. He said the WMC assets were attractive to overseas buyers as their purchase would establish a strong production base in Australia. Mr Bacchus, who advises South Africa's Harmony Gold - an emerging player in the Australian gold industry - said the reasons for mergers were compelling. "Size does count when it comes to attracting investment support," he said. Mr Bacchus said size helped place companies on the "radar screen" of international portfolio managers. Goldfields managing director Dr Peter Cassidy said industry consolidation was a natural progression in the drive for efficiency.