Alacer Gold says it cannot guarantee the future of its up-for-sale mines in the Goldfields beyond the middle of next year, after it wrote down their value by $456 million.
This reporting season has been awash with big writedowns on the value of Australian gold assets, with Silver Lake Resources saying yesterday it expected to slash $320 million to $370 million - as much as 44.5 per cent - from the book value of its operations.
Western Areas also joined the impairment party, in the process adding the nickel sector to the gold malaise, saying it expected to book an after-tax writedown of $90 million to $100 million for the just-completed financial year. The nickel producer said the non-cash impairment related to past exploration expenses on its Forrestania tenements and included a writedown of the Diggers South project value.
It remains unclear whether WA's other nickel miners will be forced to follow suit and adjust book values because of a persistently weak metal price.
The gold sector's woes, driven by a falling precious metal price and insufficient relief from a weakening Australian dollar, have sparked billions of dollars of asset impairments, much of it in WA as highlighted by Newmont Mining's decision late last week to slash the value of its Boddington operation.
The biggest impairment yesterday was Alacer's. It cut the value of its Higginsville and South Kalgoorlie mines by $US412 million ($456 million), leaving its Australian assets with a fair value of only $US228.1 million at June 30. At the close of the June quarter, Alacer's Australian business unit also recorded an operational loss of $US15.3 million, alongside $US148 million in liabilities.
Alacer chief executive David Quinlivan told _WestBusiness _ the sale process was attracting interest but there was no certainty his company would find a buyer for the Goldfields mines. A cost reduction plan last quarter, which included culling 130 jobs, meant the mines would be cash flow positive for the next 12 months. But with Alacer winding back a new underground development towards the end of this year, Mr Quinlivan said the future of the mines was in doubt from next June, unless a buyer was found or the gold price returned to higher levels.
Silver Lake said it had cut costs and frozen capital spending. It cut director fees by 10 per cent and will impose a group-wide salary reduction of 7.5 per cent. Silver Lake said it was reviewing the recoverability of its asset values, including goodwill, and expected to book a $320 million to $370 million pre-tax impairment in its full-year results.
- A WEEK TO WRITE OFF *
·Silver Lake Resources - $320m to $370m
·Alacer Gold - $456m
·Western Areas - $90m to $100m
·Evolution Mining - up to $400m
·Kingsgate Consolidated - $320m
·Ramelius Resources - $58m
·OZ Minerals - $200m to $240m
·Resolute Mining - $70m
·Newmont Mining - $2.3b
Source: ASX company announcements