Phoenix Gold Bid Highlights Poor Industry Growth Prospects

John Robertson

PortfolioDirect

Phoenix Gold is the subject of a conditional takeover bid by the same Chinese mining group with an 82% stake in Norton Gold Fields. A funding deal between Phoenix Gold and Evolution Mining that would have resulted in Evolution owning 19.9% of Phoenix precipitated the blocking move by Zijin Mining. The strategic positioning of Phoenix Gold was highlighted in my wire at (VIEW LINK) . The squabble over Phoenix is symptomatic of the limited growth options within the Australian gold mining industry despite historically high gold prices. Capital constrained companies are reverting to areas of historical activity requiring smaller budgets for development, having made little headway in finding new sources of ore. Investors are having to choose between these approaches which deliver near term production but typically over relatively short periods and a plethora of poorly funded explorers able to identify only the most easily accessible mineralisation with consequently limited economic prospects. This will lead to more emphasis on strategic positioning when it comes to choosing stocks.


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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