The 20% drop in spot gold this year has claimed another victim. Alacer Gold’s board has replaced its chief executive after the company failed to sell its Australian mines, or rather received several offers for them which were not to its liking.
Rodney Antal, an Australian based in Alacer’s headquarters in Denver, Colorado, is the new chief executive. He replaces Perth-based David Quinlivan who sold a gold deposit just outside Kalgoorlie, Frog’s Leap, for $US149 million in April.
But Quinlivan has not managed to attract a good enough price for two other Australian gold mines that remain on Alacer’s books – Higginsville and South Kalgoorlie. Alacer is now trying to maximise cash flow from these two mines in the next 18 months. But if the gold price remains about $US1300 an ounce, mining activity at these two assets will be wound down and the operations put into care and maintenance.
Alacer’s Australian mines are simply too expensive. Total cash costs at the two mines are about $US1200. In contrast, Alacer’s Turkish mine has a total cash cost of about $US420 an ounce. The spot gold price at 1132 AEST was $US1332.13.
Antal, who has worked at Rio Tinto and gold miner Placer Dome, is seen by Alacer’s board as a better manager of a diverse workforce across different countries. His challenge now will be to secure a better price for the company’s Australian mines. Alacer says discussions with potential buyers are continuing. Some talks, it says, are “well advanced”.
Still, it’s hard to see Alacer getting the price it wants for its two Australian mines. Like all commodity producers it is hostage to the price of what it mines. That’s not looking good. The company refuses to speculate on what may happen with the gold price, a sure sign it is nervous bullion may fall.