Newcrest nixes Hidden Valley mine in PNG

Good riddance to Newcrest’s ‘problem child’, not that the Hidden Valley mine in PNG has been its only bad asset.

Newcrest Mining (NCM) $21.65

Good riddance to the goldminer’s “problem child”, not that Newcrest’s Hidden Valley mine in PNG has been its only delinquent asset.

Newcrest has not so much sold its half stake but agreed to pay $US22.5 million ($30m) to South Africa’s Harmony Gold to make it go away.

While Newcrest recognises a $US10m loss on the divestment, it’s a winner in that it can reverse $US35m of rehabilitation obligations.

The underperformance of Hidden Valley, located in steep, wet and earthquake-prone terrain 300km northwest of Port Moresby, is reflected in operating costs much higher than Newcrest’s five other mines.

In the 2015-16 year, Newcrest reported overall all-in sustaining cost of $US762 an ounce, compared with Hidden Valley’s $US1255 an ounce on output of 73,000 ounces.

Broker RBC had estimated an AISC of $US1544 an ounce for Hidden Valley in 2016-17, on output of 60,000 ounces of gold and 706,000 ounces of silver.

The sale means Newcrest has tweaked full-year production guidance to 2.35-2.6 million ounces, from 2.4-2.65 million ounces previously.

While no one likes to see output fall, it doesn’t make sense to dig the stuff up for marginal gain. Still, we reckon there’s better gold value elsewhere after the recent sector pullback and maintain an avoid call.

Kingsgate (KCN) 41c (shares suspended)

That’s awkward. In a prezzo to global gold heavies at this week’s Denver Mining Forum, Kingsgate inserted a large question mark on the page pertaining to its mainstay asset, the Chatree mine in Thailand.

The company cites a “number of sensitivities” relating to the mine’s future — an understatement given the Thai government has ordered its closure by the end of December.

Kingsgate shares have been suspended since May 12, when the closure was announced in the interest of maintaining social harmony.

The mine has been subject to environmental protests, although its practices were given the all clear by global consultancy Behre Bolbeare.

Seizing on the uncertainty, Northern Gulf Petroleum last week swooped with a proportional offer of 4.2c for 50.1 per cent of the company.

Northern Gulf is the plaything of Thai-coon Chatchai Yenbamroong, who argues that the heavily indebted Kingsgate is doomed without Chatree and that he can do a better job negotiating a future for the mine.

Northern Gulf makes little mention of Kingsgate’s other asset, the Nueva Esperenza gold-silver project in Chile that is in prefeasibility stage.

Kingsgate has told holders to take no action — a no brainier given the shares aren’t trading.

With no market steer on the value of their shares, Kingsgate investors are in the dark.

The company remains confident the decision can be reversed, but the Thai regulators have been in no hurry to chat over a Singha beer or two. Given Kingsgate’s parlous state, selling half of one’s holding for a derisory sum might be better than the alternative of eventual insolvency, but there’s no hurry. Hold.

Paradigm Biopharma (PAR) 60c

That’s nothing to sneeze at. The $50m biotech will steer a human trial of an old drug as a cure for hay fever, a widespread but poorly treated affliction.

Paradigm identified the blood thinning drug, the beechwood-derived PPS, for its anti-inflammatory properties and has programs to treat bone-bruising (aka wonky knees) and Ross River fever.

Animal trials now suggest PPS is effective against “allergic rhinitis’’, for both the initial runny-nose stage and the congestion induced by nasal inflammation.

The trials, carried out on guinea pigs at Sweden’s Lund University, produced “compelling” data relative to the current treatment, the nasal steroid budesonide marketed as Rhinosul.

Paradigm CEO Paul Rennie said the hamsters were literally used as guinea pigs because their immune systems is closest to that of a human.

The phase two placebo-controlled human trial, also to be carried out in Sweden, will involve 40-50 patients with known allergies.

Given the candidates are induced with hay fever, such a trial would have not received ethics approval in Australia. But while the Swedes elevated personal safety over style by inventing the Volvo, in the medical sphere the pursuit of science overrides an individuals’ discomfort. Spec buy.

ASX (ASX)$47.78

ASX holders venting their ire at the bourse’s two-phase trading outage yesterday afternoon would have had to resort to rival platform Chi-X to sell their shares.

And we thought Maurice Blackburn suing Slater & Gordon set the high benchmark for irony.

Along with the ABS on Census night, Telstra (numerous mobile network outages) and Tabcorp (Cup Day meltdowns) would attest to the perils of a core platform that can’t stand the heat.

Forget blockchain. Does the bourse need to spend a few more pennies on the here and now? One line of inquiry is why the glitch didn’t happen on Friday, enabling traders to slope off early for the sports-laden weekend. Hold.

The Australian accepts no responsibility for stock recommendations. Readers should contact a licensed financial adviser. The author does not hold any of the shares mentioned.