AurionGold eyes higher profit, Placer ups its stake

With a bull’s-eye on its chest AurionGold has reported a net profit of A$63.2 million (or 20 per fully diluted share) for the twelve months ended June 30.

That’s a 33% improvement over the A$47.7 million (25.2 per share) in net profit posted by Goldfields a year earlier, and includes the results of the former Delta Gold operations for the second half of the fiscal year.

AurionGold was begat in December through a US$425-million merger of Delta Gold and Goldfields, two medium-size mining houses. Delta brought with it 100% of the Kanowna Belle, Golden Feather and Wirralie gold mines, plus a 40% stake in the Granny Smith mine. Goldfields chipped in the Paddington and Kundana mines in Western Australia, the Henty mine in Tasmania, and a quarter-stake in the Porgera mine in Papua New Guinea.

AurionGold’s sales revenue between the two periods climbed to A$476 million from A$355 million. Cash flow from operations was A$136 million, up from A$118 million.

During the year, the company produced 790,775 oz. of gold, with 65% of that coming in the second half of the year. The wholly owned Paddington mine in Western Australia, churned out 225,256 of those ounces.

The company realized an average of A$593 for each ounce produced during the year, better than the average spot price of A$552 per oz.

On the exploration front, reserves at the end of June amounted to 7.6 million oz., a 25% increase since the merger was completed.

At year’s end, AurionGold’s net debt stood at A$194 million. The company had A$47.3 million in cash and some 5.9 million oz. of gold hedged through 2011.

On the takeover front, as of Aug. 12, Placer Dome ‘s (PDG-T) reported stake in AurionGold had risen to 27.5%, up from 21% on Aug. 6 when Placer extended its bid for the third time.

Terry Burgess, the Australia-based gold miner’s chief executive officer says that Placer’s current stake in his company isn’t a concern for the company, and that the Canadian miner would have to increase its stake significantly before it became so.

AurionGold’s board, as it has since its launch in late May, continues to recommend that shareholders reject Placer’s hostile bid of 17.5 of its own shares for every 100 shares of the Aussie gold miner. The offer also includes a cash sweetener of A35 per share.

“AurionGold has a very viable outlook in its own right based upon the performance of the company as a stand alone entity for just over eight months,” says Burgess.

“Given ongoing strong operating performance, we currently anticipate that the production level for the coming year will be increased over 2001-02, which with lower anticipated costs, should lead to increased profits and fully franked dividends,” he added.

AurionGold’s directors have declared a final, franked dividend of A7 per share payable Sept.6 to shareholders of record on Aug. 23.

Based on Placer’s closing share price on the Toronto Stock Exchange on Aug. 12, the bid values AurionGold at A$3.32 per share. AurionGold shares ended A2 lighter at A$3.25 on the Australian Stock Exchange on Aug. 13.

Placer’s bid, which is final and unconditional, is set to expire on Aug. 16.

A successful takeover would give Placer full ownership of the rich Granny Smith mine and lift its half-ownership in Papua New Guinea’s Porgera mine to 75%. It would also create the world’s fifth-largest gold miner with annual production of about 3.8 million oz.