Gold sale falls through

By Phil Boeyen, ShareChat Business News Editor

Tuesday 24th April 2001

Australian gold mining company Goldfields has withdrawn an offer to buy part of a mining joint venture in Tasmania owned by Otter Gold subsidiary Allstate Explorations.

Last month Allstate said it was negotiating for a possible sale of its 51.51% interest in the Beaconsfield Mine Joint Venture in northern Tasmania.

The other partner in the venture is Australian company Beaconsfield Gold, which has a 48.49% direct interest.

Goldfields had made a non-binding offer of $32 million to acquire Allstate's stake in the joint venture and to take the company's hedge book of future production.

Despite the withdrawal of the offer Allstate says it will continue to discuss with interested parties a possible sale of the joint venture.

Otter Gold holds a 29.6% net equity interest in the Beaconsfield Gold Mine through its 56% holding in Allstate Explorations.

In the half-year ended December Otter reported a tax loss of $11.6 million after a write down of $17.8 million in the carrying value of Allstate's interest in the Beaconsfield joint venture.

Otter's directors said at the time the write-down was prudent to more closely reflect the value that the market was placing on Allstate's equity ownership in the Beaconsfield Mine as a result of prolonged commissioning difficulties.

Although production from the joint venture improved in Otter's latest half year the company said the plant was still operating well below design levels.

Allstate, as manager of the joint venture, has made claims against the construction contractor for costs and damages in respect of the design and construction problems.

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