Summit Gold to try Australia

Press, 30 March 1989, Page 22

Summit Gold to try Australia

PA Wellington Summit Gold, Nl, a listed exploration firm, plans to restructure itself into an Australian company, in a bid to raise Summit directors told the Stock Exchange on Tuesday that talks were being held that could result in a take-over offer for its shares. They issued a "don’tsell” advice to shareholders pending further information. Any bid!)that did result from the talks was likely to be a restructuring by a third party, said Summit’s chairman, Mr Colin Beyer. The aim was to transform Summit into an Australian company, which would enable it to raise further share capital in spite of a depressed sharemarket price, he said.

Summit shares are at 6c, well below the shares’ 25c par value — which was last reached on the market in January last year.

Under New Zealand company law, companies cannot normally issue new shares at below par value — ruling out a share allotment as a fund-raising option for Summit. But Mr Beyer said Australia did not have such a restriction for noliability companies like Summit.

The bar on issuing shares at a discount was a "real structural problem” in the New Zealand corporation law and one on which he had made submissions to the Law Commission, which is examining the issue.

At Summit’s annual meeting in

December, Mr Beyer pointed to the difficulties the low share price was causing. He said directors had “pruned all costs to the bone” and negotiated farm-out arrangements on several of its exploration projects in a bid to preserve Summit’s cash.

Becoming an Australian company would not pose too many difficulties for Summit. Although registered in New Zealand, its business office is in Perth, the home of managing director, Mr Alan Eggers, and most of its exploration tenements are in Western Australia.

Summit’s cash problems were detailed in its report three weeks ago of an unaudited $93,700 loss for the six months ended December 31.

At the interim balance date the consolidated accounts showed shareholders’ funds of $6,594,000, giving a net asset backing of 16.5 c a share. But $6,074,000 of the total assets of $6,622,000 consisted of exploration tenements valued by the directors or an independent assessor.

During the latest six months Summit’s working capital fell by $128,000 to $487,000, mostly because of a reduction of funds on call deposit to $440,000 — down from $l.B million in June, 1987.

According to its annual report, as at November 2, the largest shareholders were Kingfisher Nominees (19.47 per cent), Climax Mining (16.3%), and Minvest Securities NZ (14.3%). Apart from Climax’s, the ownership of the other three firms is unclear.