Image problem impacts Bond Intl Gold shares

The shares of Bond International Gold have been trading at $7.25(US) recently, well below the price of other senior gold mining companies with production over 300,000 oz per year.

According to BIG director Stephen Everett, the company has suffered from an image problem, largely as a result of a global assault on the credibility of Alan Bond, and his group of companies, by the London-based trading hou se Lonrho PLC and its chief executive, Roland “Tiny” Rowland.

Probably the most widely publicized attack on the Australian entrepreneur’s credibility was a 93-page Lonrho report alleging that the giant brewing and media company, Bond Cor , was “technically insolvent.”

Alan Bond is the principal shareholder of Dallhold Investments, a private company with controlling interests in Bond Cor , and Bond International Gold (BIG). He is also a director and chairman on the board of both companies.

In his defence, Alan Bond has described himself as a misunderstood visionary practicing the most modern business techniques. Outside business, Alan Bond is perhaps best known in North America for winning the 1983 America’s Cup sailing race. Producing on target

In a recent interview with The Northern Miner, Everett who is chief executive officer of Bond Gold Cor , explained that widespread criticism of Alan Bond and the Bond group of companies has spilled over to affect BIG’s share prices.

“We have under-performed our peers in share price,” admits Everett, “but our recent quarterly earnings were above what analysts expected, and our new gold mines have been commissioned ahead of schedule and are producing on target.”

BIG’s first Canadian mine, Golden Patricia, reached design capacity last October, and currently operates at an annual production rate of 60,000 oz of gold per year (N.M., Mar 6/89). Using shrinkage stope mining methods, the mine/ mill operation processes 250 tonnes of gold ore per day.

During the second quarter, BIG opened its Richmond Hill mine in South Dakota, which will add a planned 41,000 oz to the company’s annual gold production.

The first six months as a publicly traded company have seen BIG commission two new mines, and increase its annual production to more than 400,000 oz. Other production comes from Chile and California. Two large development projects — the Big Pit in Kalgoorlie, West Australia and the Bullfrog mine in Nevada, are scheduled to begin production in the second half of this year.

The company recently reported second quarter net income of $13.3 million(US) and gold production of 116,400 oz. Net income for the company’s first six months of the fiscal year was $15.2 million or 28 cents per share, while 6-month total gold production was 215,600 oz. Debt position

Commenting on BIG’s debt position Everett said the company’s 421,500 oz gold loan will be repaid by production from the Bullfrog mine, which is scheduled to produce about 220,000 oz of gold per year starting in the second half of this year. The Bullfrog mine will be the company’s largest North American gold operation.

Everett said BIG has very few forward gold sales.

With no further major acquisitions planned, future growth will come through exploration, he said. According to Everett, BIG has an exploration budget of $22 million(US), and will spend $8 million in the U.S., $6 million in Chile, $5 million in Canada, and $2 million in Uruguay, with the balance spent in Australia.

Uruguay, the small South American country adjoining the southern boarder of Brazil, is a “little sleeper,” Everett said. “It has a totally unexplored greenstone belt.”

He said Bond International Gold is currently working out a foreign investment deal with Uruguay to expand its exploration activities there.

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