ON February 18 gold and tantalum miner Sons of Gwalia’s new management team delivered the company’s 20th half yearly report.
Prior to the announcement analysts had been tipping a “pretty soft report” with profits after tax ranging between $14 million and $22 million.
Gwalia has been clawing back its share price since early last year when it reached a low of $1.30 – falling from highs of almost $10 in 1999.
Since then the stock has rallied to about $3.40 and the company’s founders, brothers Peter and Chris Lalor – known for their hands-on style – have prepared for their exit and the installation of new management.
This has been spearheaded by the appointment of new managing director John Leevers last month.
Mr Leevers said after an initial hand-over period he intended to conduct a full strategic review of the company to be completed by the end of the financial year.
Gwalia has already undergone recent restructuring but he intends to have “a very close look” at the organisation’s costs.
Whatever happens, there is no rush.
“The company is not in dire straits. We’ll sit and we will methodically go through everything and do a long-term plan for the company,” Mr Leevers said.
While he admitted to not having a plan, Mr Leevers does have some thoughts on what the company will need.
“Obviously we need to strengthen our resource base,” Mr Leevers said.
“How we do that is the biggest question mark.
“I have got a very open mind about whether we stay in gold and tantalum only, or should be looking for other minerals.”
Currently Gwalia is conducting a desktop analysis of its WA projects for nickel sulphide deposits.
The study’s results are expected in April.
In the company’s gold business, where there is speculation of a spin-off, analysts are concerned about a lack of ore and high costs.
“It is recognised the gold business is a bit lean on for resources so we have a real challenge there to develop that or strategically look at it,” Mr Leevers said.
He acknowledged ongoing operational problems at Gwalia’s Tarmoola gold mine but said a plan examining a big pit option that could dramatically extend mine life would go to the board soon.
“It’s quite an exhaustive study, probably six months work,” Mr Leevers said.
He also flagged a possible venture outside Australia given the local gold industry’s maturity.
In the company’s tantalum business, where demand had recently picked up, Mr Leevers said the market was probably a little ahead of itself.
“I think by the end of next calendar year we should start to see the market move quite well,” he said.
Drilling results are due at the end of the month from a tantalum project Gwalia holds in Brazil.
Mr Leevers said a recent joint venture in Victoria’s Murray Basin, where Gwalia would acquire a 15 per cent stake in a large minerals sands play, demonstrated the company’s intention to stay competitive in the mineral sands market.
“Whether we decide it is a strategic stake or a non-core stake it is yet to be decided,” he said.
“I think by the end of next calendar year we should start to see the market move quite well.”
- John Leevers
