Alacer Gold has announced its intent to sell off its Australian assets so it can focus on its gold mining operations in Turkey.
Chief of Alacer, David Quinlivan said in a statement:
“Alacer has recently received confidential, non-binding expressions of interest from several parties interested in purchasing its Australian assets,” he said.
“The sale of the Australian assets would enable the company to focus on its high margin operation and exploration activities at its world class Copler Mine in Turkey
Alacer said the timing and outcome of any sale is ‘uncertain’.
The move comes after the company posted a large drop in profits for the first quarter of 2013, and outlined plans to cut costs in order to boost margins.
In an investor presentation in early May, Alacer said net profit had dropped to $14.7 million for the quarter, down from $66.7m a year earlier.
Gold sales were also down $12.4m for the quarter, and cash costs rose to $932 an ounce, up from $759 the same time last year.
“Against the backdrop of a weaker gold price and challenging first-quarter cost results, Alacer is reviewing its 2013 production goals,” the company said.
The bulk of Alacer's operations are located in Turkey, but the company owns the Higginsville Gold and South Kalgoorlie projects in the WA Goldfields.
Neil Charnock, an economist at leading gold investment and trading company Gold Oz told Australian Mining that the gold market was in for a rough 12 months as the market faces what he calls a ‘correction’ phase.
Charnock said the temporary falling prices will be met with a sharp rally as prices hit record highs again, but that in the meantime continuing falls are set to ‘cause havoc’ to Australia’s gold mining industry.
“We are in a major correction that will most likely last another 12 to 18 months,” he said.
“Many companies will struggle to make a profit so jobs will be lost, merger and acquisition to come along with cost cutting.”
The price of gold has fallen 26 per cent in 6 months.