Australia | Jun 05 2006
By Rudi Filapek-Vandyck
It hasn’t been a smooth relationship from the moment Smith Barney Citigroup initiated coverage on the stock more than three years ago, but at least Croesus Mining (CRS) received regular attention from one of the leading stockbrokers in the country. That side of the story is now over as Citigroup analysts have decided the risks surrounding Croesus’ future have become too high. A decision to cease coverage has been taken.
There won’t be any immediate effect on the company’s share register, as Croesus shares are still suspended from trading since mid-March. The main causes behind the suspension have been serious operational issues which were affecting the company’s ability to meet its ongoing hedge book commitments.
Citigroup analysts repeat the fact that the mark to market position of the hedge book was published as negative $50.1m in mid-May. The analysts suspect there may be more negative news coming from the negotiations to restructure the hedge book.
The broker’s last recommendation was Sell, High Risk and its last target stood at $0.23.
Citigroup sparked the ire from Croesus management at the time of its initiation of coverage of the company as the analysts believed the main mine did not have as many operational years left as management would have liked the market to take for granted. The analysts placed a valuation on the company which was half its share price value at the time. As it turns out, that valuation was still twice the broker’s final price target.