By FIONA ROTHERHAM
Strong performances from the Martha Mine in Waihi and the central Australian Tanami Mine boosted Otter Gold's December half-year profit to $2.6 million, compared with $260,000 in the same period in 1998.
But Otter said recent heavy rainfall from the wet season and cyclone Steve that cut off the mine would have a significant effect on Tanami's gold production during the March quarter.
In the December half-year, gold sales averaged $640 an ounce while the average cash operating cost was $456 an ounce.
The company paid a dividend by distributing its New Zealand Oil & Gas shares on a one-for-11-basis.
The Martha mine is expected to increase production in the current half-year after an upgrade, completed last month. Higher production is also forecast from the 55 per cent-owned Beaconsfield mine in Tasmania.
Otter's 56 per cent-owned subsidiary, Allstate, is subject to a takeover bid by its joint-venture partner in the Beaconsfield mine.
Beaconsfield Gold Mines made a one-for-one scrip offer for the 73 per cent of Allstate it does not own.
Chairman Tony Frankham said the Allstate board was considering the Part A offer, but "as this offer contained no cash benefits, it is hard to see how Otter would give it a tick."
The New Zealand-based Australasian gold mining company spent months battling a bid by 19.9 per cent stakeholder Guinness Peat Group to reshuffle the board. A truce last month led to GPG's Tony Gibbs and Mike Jefferies becoming directors. GPG had said it would increase its stake to 51 per cent, but under Stock Exchange listing rules it is now an "insider" on the board and has to make a written offer to all shareholders.
"We are comfortable with GPG's position, and have made no decision whether or not to make the written offer," Mr Gibbs said.
Last October, GPG accused Otter of speculating on its gold hedging contracts.
In the half-year result, Otter said the close-out value of Otter and subsidiary Allstate hedging had fluctuated since December 31, and now stood at a potential loss of $3.6 million.
Mr Frankham said the two GPG directors had not sought changes to the complex hedging policy now they "better understood" it.
Gold rush boosts Otter's profit
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