Kula Gold and Phoenix Gold are both abandoning development plans outlined in feasibility studies due to capital market indifference

John Robertson

PortfolioDirect

Kula Gold and Phoenix Gold are both abandoning development plans outlined in feasibility studies due to capital market indifference. They needed to spend $160 million and $136 million for annual production of 100,000 ozs and 130,000 ozs, respectively. Both are real life examples of how the costs of bringing on production are pushing against the limit of what financiers are prepared to accept. Kula Gold, now with a market value of $11 million despite a fully permitted project on an island in PNG, is faced with having to wait for a higher gold price or looking at alternative corporate deals to extract value. Phoenix, valued at $33 million, has come up with a staged plan that slashes capital needs and produces near term cash flow by doing deals with other operators around its WA base. My note Gold Equities Fail Value Test addresses whether financial markets are failing to see a value proposition or whether companies are seeing one where none exists ((VIEW LINK).


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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