Alacer joins the rush for the exit
Just months after naming the carbon tax among several factors that were pushing up costs and stifling profits, Alacer confirmed on Thursday that it would seek to leave the Australian industry and focus on its lower-cost mine in Turkey.
Alacer's two mines near Kalgoorlie were already considered among the more expensive in Australia before costs blew out in the March quarter by a further $US187 per ounce at the Higginsville mine, and $US274 per ounce at the South Kalgoorlie mine.
The problems were exacerbated by the significant drop in the gold price in April.
While the carbon tax was named as a factor that had pushed up power costs by $US31 per ounce, Alacer also said costs had risen as it mined lower grade ores, geology costs were higher, and rainfall had disrupted operations.
Alacer president David Quinlivan said a sale process for the Australian mines had begun, but the timing of any deal remained uncertain.
"Alacer has recently received confidential, non-binding expressions of interest from several parties," he said.
Alacer recently wrote down the value of its Australian mines, but despite that Credit Suisse analysts Michael Slifirski and Sam Webb wrote that any sale was unlikely to fetch the new book values of $370 million for Higginsville and $210 million for South Kalgoorlie.
"A further material reported loss can be expected when a sale is executed," the analysts wrote.
A successful sell-off would render redundant the 2010 merger of Avoca Resources and Anatolia Minerals, through which Alacer was formed.
Analysts were unimpressed when the merger was announced in September 2010, noting there would be few synergies achieved by merging a company with Australian assets with a company with Turkish assets.
The merged stock first traded on the ASX in February 2011 at $7.31 and reached a high of $11.35 in November 2011. It has been declining ever since, hitting a low of $2.09 in recent weeks.
Alacer's move continues a bad week for the local gold sector, with Focus Minerals reportedly cutting scores of jobs near Coolgardie, and Newcrest cutting more than 100 jobs and closing its Brisbane office.
Frequently Asked Questions about this Article…
Alacer Gold said rising costs and a weaker gold price prompted the move. The company pointed to higher power costs (including an estimated US$31/oz impact from the carbon tax), lower-grade ore, higher geology costs and rainfall disruptions — and it plans to focus on its lower-cost mine in Turkey.
Alacer is seeking buyers for its two Australian mines near Kalgoorlie: the Higginsville mine and the South Kalgoorlie mine.
Alacer reported costs blew out in the March quarter by about US$187 per ounce at the Higginsville mine and about US$274 per ounce at the South Kalgoorlie mine.
Yes. Alacer president David Quinlivan said the company had recently received confidential, non‑binding expressions of interest from several parties, though the timing of any deal remained uncertain.
Credit Suisse analysts Michael Slifirski and Sam Webb warned that a sale was unlikely to fetch the new book values — US$370 million for Higginsville and US$210 million for South Kalgoorlie — and that a material reported loss could be expected when a sale is executed.
If the Australian assets are sold, Alacer would shift focus to its lower‑cost Turkish operations. For shareholders, that could mean a re‑shaped company strategy and potential one‑off accounting losses if the assets sell below book value.
After the 2010 merger of Avoca Resources and Anatolia Minerals that formed Alacer, the merged stock first traded on the ASX at A$7.31 in February 2011, reached a high of A$11.35 in November 2011, and had declined to a recent low of A$2.09 in the weeks before the article.
Yes. The article describes a broader purge of Australia’s marginal goldmines, noting other recent industry actions such as reported job cuts at Focus Minerals near Coolgardie and Newcrest cutting more than 100 jobs and closing its Brisbane office.
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