Miners coy on SoG assets

It is unknown what the mining industry’s appetite will be like for failed gold and tantalum miner Sons of Gwalia’s gold assets, which are expected to be offered for sale very soon.

Conflicting reports are coming from local analysts and mining industry sources, with some saying local juniors will be very interested, while others play down the level of expected interest.

The administrator, Ferrier Hodgson, appointed in August after Sons of Gwalia collapsed under debts of more than $800 million, recently announced the appointment of two international banks to assist in the sale of the failed miner’s assets.

Ferrier Hodgson said it was expected the gold assets would be offered for sale “in the very near future”.

Swiss-based UBS Investment Bank has been appointed to advise on the sale of the Advanced Minerals Business, while Macquarie Bank has been appointed to advise on the sale of the miner’s gold assets.

A local source who did not want to be named said he expected some of the assets to create a bit of stir among smaller local companies, particularly those needing to boost reserves and resources or with some cash in the bank. 

Sons of Gwalia’s gold assets include various operations at Southern Cross-Marvel Loch region, South Laverton region and the Leonora region north of Kalgoorlie.

Its gold reserves were last reported at 3.27 million ounces, while its annual production is around 500,000 ounces.

The source suggested Kalgoorlie miner Croesus Mining, locally based Brazilian gold miner Troy Resources, and South African gold miner Durban Roodepoort Deep were among the possible contenders.

However he also said the sales process could become complicated given the somewhat unknown state of Gwalia’s extensive asset holding as well as smaller miners’ preference to pay in the form of scrip rather than cash.

It has been reported that Perth-based gold miner International Goldfields (IGL) has declared an interest in some of Gwalia’s gold assets, understood to be tenements around IGL’s Mt Ida gold project.

Other analysts are more down-beat about the gold business.

Hartleys analyst Jonathon Battershill said most of the assets were very tired and cast doubt over the level of interest in them.

He listed WA-based juniors Crescent Gold, ReLode Limited, Midas Resources, Barra Resources and mine contractor Barminco as possible contenders.

He said there also may be some overseas interest.