By FRANK ASAELI
THE Bank South Pacific Capital Ltd (BSPC) sees Highlands Pacific as an exciting turn-around for investors after its poor performance coupled with a very costly hedging strategy in the past.
This had seen Highlands share price dropped more than half again in the last two years.
BSPC noted last week BSP investors’ trade impression that these factors had put a great financial strain on the company to the extent that without significant action, Highlands would have difficulty continuing as a going concern.
“The significant action had come in the form of the sale of Kainantu Gold Mine, including a large surrounding exploration licence, to Placer Dome Oceania Ltd, a wholly-owned subsidiary of Barrick Gold Corp for the cash price of US$141.5 million (K417 million),” BSPC said.
The successful sale clears Highlands of hedging obligations and debt, leaving it with interests in the world class Ramu nickel cobalt project being constructed and the Frieda River copper gold project currently being operated by Xstrata Copper.
The company also has interests in the high potential PNG exploration ground at Wau-Bulolo Graben, near the Hidden Valley deposit currently being developed by Harmony Gold.
Sale of Kainantu also left Highlands with US$30 million (K88 million) in cash.
This, coupled with a new management team, gave Highlands a positive fundamental outlook.
“With the great performance of the stock market and metal prices, we see many established mining stocks being well-priced,” BSPC said.
BSPC also said the weekly price chart showed the timing was right for a solid long-term play.