NEW YORK ( TheStreet) -- Alacer Gold a Turkey- and Australia-focused gold producer, on Tuesday replaced its CEO and said it will shutter Australian operations that it can't sell, adding two mines to a growing list of loss-making pits on the block.
Toronto- and Sydney-listed Alacer gave itself a maximum of 18 months to sell its Higginsville and South Kalgoorlie gold operations, which together produced about 177,000 ounces of gold last year.
The task of selling the assets will fall to former CFO Rodney Antal, who replaced CEO David Quinlan on Tuesday in a management overhaul that included the appointment of a new head of finance and operations.
"Alacer advises that the sales process for its Australian assets is continuing and discussions with a number of interested parties are well-advanced," Alacer said. The company claimed to have received nonbinding offers linked to the Australian assets but warned that the slow progress of talks meant the Australian operations were "likely" to be mothballed before they were sold.Alacer's Australian operation could be worth about $600 million or less, Credit Suisse analysts wrote last month. The Higginsville operation has proven and probable reserves of 0.83 million ounces of gold. South Kalgoorlie has proven and probable reserves of 0.64 million ounces. A fall of about 26% in the price of gold since the start of the year has left many gold companies operating mines at a loss and led to huge write-downs across the industry. The high cost of mining in Australia, largely due to competition for mine staff and equipment from its large mining sector, means its gold sector is particularly exposed to falling gold prices. On Monday, the country's biggest gold producer, Newmont Mining (NEM), announced A$6.23 billion ($5.7 billion) in impairments and asset write-downs and said it will close its least-profitable operations. A week earlier Barrick Gold (ABX) wrote off $8.7 billion from the value of its assets and said it will close or reduce production at 12 of its 27 mines. Competition to find a buyer for Australian gold assets is likely to weigh on prices. "Given the high-cost nature of mines in Australia there is an interest to exit," Mackie Research Capital analyst Barry Allan wrote in a note on Barrick Gold that was published August 2. "The market's appetite for these assets may prove tough to find."
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts