Premier speculation sparks revaluation of properties

Press, 24 September 1987, Page 27

Premier speculation sparks revaluation of properties

Recent take-over speculation about Premier Mining Securities had made the directors realise how undervalued its properties were, said the chairman, Mr John Lawrey. The company had commissioned an independent geologist’s report to value the properties. The revaluation of the New Zealand properties — previously recorded at acquisition cost — increased the combined value from $480,750 to $1,660,000. This put a more realistic value on the company’s assets, he said in the annual report Premier raised $2.5 million from the placement of 8M shares and options wjth Interinvest Finanz AG, of Zurich. This, together with the offer by Interinvest to provide underwriting backing to Premier’s activities, led to the New Zealand company expanding its own underwriting business and its invest-

meat in other mining firms. Premier was also expanding its activities to include mine development and exploration. New Zealand investors had begun to realise that: • Gold mining had made a big economic contribution to New Zealand — about $2O billion in gold and silver being mined, in current value terms, since 1855. • Five big gold deposits had been discovered in New Zealand in the last five years, and production from these was expected to earn more than S2OOM a year in the early 19905. • The mining industry considered New Zealand was underexplored, although proved up on a sq km basis gave it reserves almost five times as great as Australia. • he New Zealand mining industry also considered that the return on each exploration dollar was significantly better than in Australia.

“Recognition of these factors has persuaded your directors that the company must make every effort to get itself into production and to accelerate its exploration involvement.” Premier was seeking farm-in arrangements with big explorers to maintain its knowledge in the trends on current exploration. The company had been encouraged to consider farm-ins with BP Minerals in properties that the British company is exploring in other parts of the world. The discussions with BP’s exploration management were continuing, Mr Lawrey said. As reported, Premier made a total profit of $345,836 in the year to June 30, compared with a loss of $342,739 in the previous corresponding period. The result included equity profits of $38,660 ($2343 previously) and extraordinary profits of

$428,615 from Premier’s investment in Spectrum Resources. Premier incurred a net trading loss of $121,439 ($1,224,417) but in the previous period there were minority interest and pre-acquisition profits of $801,647 to be included after the net result. Income from mining dropped 98.2 per cent to $12,565, but investment returns rose 519 per cent to $776,236. No dividend has been recommended by the directors because they believe it is necessary to develop a strong cash flow. Shareholders’ funds improved $5,387,475 to $7.5M, including ordinary capital up $2.7M to $4,875,813, after the placement and a one-for-three rights issue. Working capital now stands at SI.3M, com?ared with a deficit of 979,040 previously. The net asset backing a 25c share is 38.6 c.