In This Issue
Ausgold; capital raisings for gold companies are still strong
The gold price has recently found a level of support in the US$4,000-$4,200/oz range. Having had the price correction we are starting to see North American markets acting with more confidence in gold equities. We also hear that the Canadian market is coming back to life. Australian brokers are making money hand over fist doing placements to US institutions.
Last week Ausgold (AUC) announced an $80m, two tranche placement. The first $50m tranche is unconditional. The second tranche of $30m is conditional upon the gold price not falling more than 10%, amongst other conditions.
The noteworthy point was that most of this placement went to US institutions, and there was a relatively small discount of 3.2% on the 5 day VWAP. That suggest real appetite.
We still believe that ASX-listed gold equities do not yet reflect the implied profitability that comes with these bullion prices. The rise has happened too quickly and with some level of disbelief, but the longer gold stays around these levels the more confidence will flow into share prices. There are just so many on the table that it takes a while to get around to reviewing them.
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