PORTFOLIO POINT: The planned merger of our portfolio stock Cortona Resources with the larger Unity Mining should strengthen the potential of the combined mining company.
The planned share-swap merger of Cortona Resources and Unity Mining will result in the combined companies doubling future production to around 100,000oz of gold a year.
Cortona (CRC), with 268 million shares priced at 9c, carries a market capitalisation of $24.12 million, with about $2.5 million in remaining cash.
The larger and already producing Unity Mining Ltd (UML), with 505.3 million issued shares now priced at 13c, carries a market capitalisation of $65.7 million. That is supported by close to $38 million in cash at the bank plus cash flow from its operating Henty goldmine in Tasmania.
Under the merger plan, expected to be approved by shareholders of both companies by December, Cortona shareholders will receive 0.734 Unity shares for every one share they hold in Cortona. That will give Cortona shareholders a 28% holding in the expanded Unity company.
The combination of the two companies will underpin the development of Cortona’s Dargues Reef mine in NSW, 60 kilometres south-east of Canberra. The initial mine site is held within the company’s 700 sq km of exploration tenements embracing the historic Chinaman’s Flat/Braidwood gold fields, where widespread shallow old workings from the 19th Century are still visible throughout the district.
The progress of Cortona’s project has been constrained over the past two to three years through green tape objections, plus local and state government bureaucracies. But mercifully, the company was able to report on August 9 that the final outstanding approval had been granted to go ahead.
That last approval was a permit from the Parkes Shire Council, 400 kilometres north of the mine, to transport and treat ore concentratre from Dargues Reef to the idle London-Victoria flotation plant where it will deliver a welcome boost to local employment.
It is the first gold mine in eight years to be approved by the NSW government.
In its latest annual report, Cortona’s chairman, geologist Clive Jones, predicted: “The company is now on the cusp of being transformed from a successful explorer into an emerging gold producer. Total capital development costs will be approximately $77.6 million and the current 257,000oz mineral inventory, using a gold price of $A1600/oz, will return free cashflow of about $112 million at a net present value of $66.6 million.”
The recovered metal over the initial five-year mining operation is expected to be 250,000oz of gold (from ore averaging 7.24g/t) plus 73,000oz of silver.
Further new discoveries
The current Dargues Reef resource, being accessed through a decline shaft, extends from 35 metres below the surface to a depth of 480 metres.
The resource does not yet include several new discoveries within 150 metres of the mine. One such is the Ruby Lode, where drill intercepts include 12.6 metres of 9.9g/t and 5 metres of 10.6g/t gold. Another has been discovered with an intercept of 4 metres at 28g/t gold.
Both are within the 150 metres of the decline development and have been drill-tested to little more than 100 metres depth.
Unity’s Henty goldmine
Unity acquired its Tasmanian Henty goldmine in 2009 from Barrick Gold. It has since produced 134,000 oz at a cash cost (before royalties) of $880/oz. Since then another 350,000oz of gold resources have been delineated.
Unity also holds a 34% interest in the unlisted Goldstone Resources Ltd, which has advanced exploration projects in the West African countries of Ghana, Senegal and Gabon.
It also holds tenements on the Bendigo Goldfield, where its idle Kangaroo Flat gold processing plant may be adapted for the new Dargues Reef expansion.
Viralytics shares soar
Our cancer cure hopeful Viralytics (VLA) saw its shares soar from a low last week of 25c to close at 33c on a turnover of 1.5 million. o far this week they traded as high as 40c.
The move reflects further progress in the clinical trials of its patented CAVATAK injections of melanoma sufferers involving the use of the Coxsackievirus (related to the common cold) to destroy cancer cells.
Under the watchful eye of the US Food and Drug Administration, another four prestigious cancer centres have been recruited to expand the company’s Phase 11 trials on up to 63 target subjects.
Thirteen have now been dosed progressively, with two so far moving on the extension trials. Viralytic’s chief science officer Prof Darren Shafren, of the University of Newcastle, said the Phase 11 trial will be achieved when immune-related, progression-free survival at six months is observed in 12-14 of 63 target subjects.
The Speculator portfolio (as at October 23, 2012)
|Company||Code||No of shares||Bought||Purchase price||Current price||Current value|
|Image Resources||IMA*||20,000||31/12/2010*||$0.338 av||$0.270||$5,400|
|Robust Resources||ROL||6,000||31/12/2010*||$1.49 av||$0.630||$3,780|
|Scotgold Resources||SGZ||27,500||31/12/2010*||5.5 av||$0.060||$1,650|
|GoConnect Ltd||GCN||250,000||31/12/2010*||0.034 av||$0.013||$3,250|
|Broken Hill Prospecting||BPL||30,000||22/02/2011*||0.132 av||$0.100||$3,000|
|Cortona Resources||CRC||25,000||13/04/2011*||0.146 av||$0.091||$2,275|
|Golden Gate Petroleum||GGP||408,500||20/04/2011*||0.0145 av||$0.007||$2,860|
|Orpheus Energy||OEG||19,250||17/08/2011*||0.164 av||$0.065||$1,251|
|Black Mountain Resources||BMZ||10,000||17/04/2012||$0.300||$0.235||$2,350|
|Total value of portfolio||$52,397|
|Owe the bank||-$8,835|
|Portfolio change since January 3, 2012 (started with $50,000)||-12.88%|
|All Ordinaries change since January 3 2012 (then 4155.22)||9.93%|
|All Ordinaries close 23 October 2012||4568|