Australia | Jun 28 2006
By Greg Peel
In September last year, Macquarie put an Underperform rating on Croesus Mining which it reiterated in November. We haven’t heard from them since. In January, GSJB Were ceased coverage. In March, citing risks associated with single mine companies, Aspect Huntley put Croesus "under review". Earlier this month, SB Citigroup pulled the pin.
Last week, Croesus went into administration. It had failed to restructure its finances and meet its gold hedging debts.
Two weeks ago, GSJB Were ceased coverage of Resolute Mining (RSG), suggesting the analysts had better things to do with their time. Today Aspect Huntley, the only other advisor in the FN Arena database covering the stock, followed suit.
Aspect reports that at last count, Resolute had 650koz of gold committed through its hedge book at A$627/oz. With gold at A$800/oz this represents a loss of $112m. Supposedly, Resolute has something like $400,000 in the bank.
As it was closing the door, Aspect’s parting comments were that the new Syama mine in Mali had the potential to turn Resolute into a 500koz plus producer by FY08. If Resolute is going to save itself, it needs to reduce operating costs, increase spot sales and sort out its hedge book. Syama could possibly help with the first two, but the third is academic. "Resolute is not bargaining from a position of strength", said Aspect, and with that it was gone.
And then there were none.
P.S. FN Arena has been notified that another news service recently reported that CSFB (the old name for the company currently trading as Credit Suisse) has ceased coverage on Resolute Mining as well. However, we can report that CSFB/Credit Suisse has never officially researched Resolute Mining. It is therefore by definition impossible Credit Suisse would have ceased coverage.