Otter consolidates in 'disinterested' market

Only 27% of shareholders took up the 2-for-5 rights issue at 39 cents, which was announced at the end of August when the company's shares were trading at 57 cents. The shares closed Friday at 38 cents.

At its AGM today the company told shareholders that the issue price of the new shares dragged down the overall price, and none of its institutional investors took up their rights.

Otter says this continues the general market disinterest in mining, and particularly gold mining, stocks throughout New Zealand and Australia, and around the world.

As a result of the lack of interest in the rights the company's largest shareholder, GPG-subsidiary Sabatica which underwrote the issue, has increased its interest in Otter from 19.9% to just over 43%.

Now that the $11.7 million raised from the rights issue has eased the pressure on the group's finances, the challenge is to increase gold production in the current year.

Last year the company mined around 119,000 ounces of gold, which fell short of expectations due to problems at all its operations, including delays in commissioning expanded production facilities at Martha Hill in Waihi, and unusually heavy rain at Tanami in the Northern Territory.

Otter Gold told shareholders that the financial year to June 2001 is a time for consolidation for the company, with the major pit cut-back in progress at the Martha Mine and remedial work to redress operating deficiencies at the Beaconsfield plant in Tasmania expected to be completed in late December.

In total Otter has invested over $150 million in the past six years in the development of the Tanami and Beaconsfield Mines and the major expansion of the Martha Mine, including more than $72m in the last two years alone, and it says once the Beaconsfield plant is fully commissioned equity production should increase to approximately 150,000 ounces a year.

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