Golden Dragon Holds Out For A Nordic-inspired Price Re-rating
The Age
Monday March 7, 2005
PERTH-based but Nordic-focused Dragon Mining NL suspended itself on Friday while it put the finishing touches to a placement and a planned shareholders' share purchase plan. The moves are expected to pull in about $5 million, which will help to tidy up the balance sheet ahead of the group's first gold production from the Svartliden mine in Sweden.
The first gold pour is expected any day, but there is no hiding from the fact that it was meant to have happened in August last year. The delays in commissioning the mine and the associated cost blow-out forced Dragon to renegotiate its financing facilities with Macquarie Bank, also a 9.7 per cent shareholder.The share price suffered as a result, falling from around 36 ? a share back in August to 23.5 ? last week.Assuming the latest fund-raising goes off as planned, the months ahead should be happier times for all involved. Svartliden is a 50,000-70,000 ounce-a-year operation that, because of its grade, should be a nice earner.If that was all there was to Dragon, it would all be a bit ho-hum. But this changed with the group's acquisition of gold assets in Finland from Outokumpu, now a 5.4 per cent shareholder.The asset sale by Outokumpu was part of its retreat from mining and gave Dragon a near 1 million-ounce gold resource base as well as a processing plant.Dragon plans to bring the 50,000-70,000 ounce-a-year Vammala project in Finland to production in 2005 and the similar-sized Pampalo project to production in 2007. Further out there is a massive database to work through that is bound to throw out other development opportunities.The result of all that is that Dragon now presents itself to the market as an annual gold producer of 200,000 ounces-plus in the near term, with further growth to come.That means it is holding out for a re-rating of its shares. The balance-sheet tidy up, first production at Svartliden, and the additional opportunities in Finland should make sure of that.THE Government of Gloria Macapagal-Arroyo has declared that the Philippines is intent on establishing a world-class mining sector.That might not suit the host of non-government organisations that seem just as intent on banning mining, which could make a contribution to raising living standards.But its good news for a host of junior Australian mining companies that have made the undoubted mineral wealth of the Philippines their prime focus.Among their ranks is the Perth-based Rusina Mining NL, which has been gathering some momentum on the back of its Acoje platinum/nickel sulphide project.The broad and high-grade nature of the mineralisation means Acoje has better-than-average development prospects, a situation reflected in the group's decision to appoint a consultant to expedite a feasibility study into its development.The local market hasn't got behind the story, but the London market has, with Rusina pulling in $6.4 million from a share placement at the equivalent of 20.67 ? a share ahead of a listing on the Alternative Investment Market.AIM is proving to be a happy hunting ground for juniors looking for some new funding. If the story is right, the funds can be picked up in quick fashion. The Brits are big fans of the idea that the commodity prices will remain "stronger for longer" in response to the China-led boom. As a result, the British are more than happy to pump money into the early stage production opportunities across the full sweep of commodities. Apart from anything else, there are only so many BHP Billitons, Rio Tintos and Xstratas that can be stashed away in mining/commodity funds.Fresh from its London raising, Rusina shares have skipped higher. On Friday the stock gained 3.5 ? to 28 ?, keeping the Brits happy, no doubt. Existing shareholders are to be kept happy by the offer of a rights issue of 1 ? options. Consultants and directors also get looked after with a placement of options.
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