News

March 04, 2009

Norseman Gold Sees Blue Skies Ahead With Its Finances Sorted And Production Costs On The Way Down

By Charles Wyatt

If there is one thing that encourages investors, it’s seeing the chief executive of a company buying himself a goodly slug of shares. In the case of Aim-traded Norseman Gold it was Barry Cahill who has just converted his outstanding A$500,000 director loan to the company into 2.85 million shares at 8p each. This is a big bet on Norseman and on gold. Barry himself puts it slightly differently: “I’m not a gambler”, he says, “but I couldn’t miss this opportunity. They don’t come too often. I only wish I had done it at 2.5p like some others.” He’s referring to the fact that Norseman’s shares were even lower than that in the market chaos at the end of last year, but it is a very lucky man who gets into a stock right at the bottom. In fact Barry’s deal was part of a general restructuring of his company’s finances which took place after agreement was reached to redeem the company’s A$15 million in convertible loan notes at a snip at A$10 million.

There had been worries as to whether Norseman would be able to repay A$5 million of these convertible notes due in April this year. Similar payments were due in 2010 and 2011, and this structuring of the company’s debt may have put a bit of an anchor on the share price even as gold was sailing up towards A$1,500 per ounce in the last few weeks. The holder of the notes clearly took a view on the ‘bird in the hand’ principle and Norseman has got itself a 33 per cent discount. It is paying for the...