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Wits Gold to tap US market Posted: Sun, 04 Jun 2006 [miningmx.com] -- TAPPING into the more liquid US markets could become something of a trend for small cap South African-based gold companies. Shortly after Aflease Gold unveiled a level one ADR programme, the yet more speculative gold share – Wits Gold – is doing the same. Wits Gold CEO Marc Watchorn confirms plans are in place. “The intention is to launch a level one ADR programme. The aim is to increase our international exposure and liquidity.” DRDGOLD has a long-established ADR programme in the US; in fact, it’s among the top 10 of most traded stocks, outpacing British telephony conglomerate Vodafone. Wits Gold is currently relatively illiquid, with a 20% free float. But that will be changed in around four months once the lock-up of shares imposed by corporate advisor, JP Morgan, on the founders is relaxed. Were the founders to sell their total shares, Wits Gold’s free float would increase to about 74%. Says Watchorn: “The lock-in arrangement with JP Morgan was a step considered appropriate by Adam Fleming (Wits Gold chairman), who wanted to assure the market that the listing wasn’t just an opportunity to make a fast buck.” However, the perception in the market is that Wits Gold has run harder than it should. Initially estimated to list at around R20, it’s now trading at R60/share – after recording a R90/share high in April. Given that it has speculative gold reserves and no immediate mining plans, questions are being asked. Watchorn says that based on resources in the ground, Wits Gold is comparatively cheap – at about $1,70 per resource oz – against nearly all North American exploration firms. “I can’t find an exploration company that is SAMREC (mining code) compliant that’s so inexpensive.” However, another factor behind the scepticism that’s greeted Wits Gold’s listing is that there’s no comparable exploration firm in South Africa. “There isn’t great acceptance of exploration firms in this country.” Hence the decision to test the North American market. Wits Gold has prospecting licences over 142 million oz of gold in three South African gold fields. But many of those resources are relatively deep – some descending to 5km, far deeper than anything currently being mined. AngloGold Ashanti CEO Bobby Godsell has expressed an interest in one day mining at such a depth, though critics can’t foresee it. The ADR level 1 programme doesn’t constitute a listing in North America. Rather, offshore investors can buy the stock through a nominee, which buys the shares in South Africa. The benefit to such shareholders is that they can receive their dividends or price appreciation in their home currency.Free news alerts: click here to
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