Norseman Gold – Another milestone reached: getting there

PUBLISHED: 16 Mar 2013 @ 18:19 | Comments (0) | More info about Tom Winnifrith

Another week and another milestone has been reached for Norseman Gold (LSE:NGL). We are not yet at the point where we can say that the shares will return to AIM but we are getting closer. Let me explain.

As you may well remember Norseman – one of my moist disastrous share tips in a 25 year career – announced last autumn that it was putting its operating subsidiary into the hands of the administrator. This was not the same as the parent company going into administration as I explained in detail to those who assumed this was a write-off HERE

It is worth reading that piece again so that you understand the background.

On 12^th March the process of administration came to an end with various creditors having now agreed to cents in the dollar write-offs. And so ownership of the subsidiary has reverted to the parent company and this will take effect by 20^th March.

But in order to regain an ASX and AIM listing Norseman must now show that it has sufficient working capital to execute its latest business plan. Hopefully this business plan unlike its predecessors involves getting gold out of the ground at a profit. It is therefore inevitable that more cash will have to be raised and, having come this far, Tulla – the operator of the mines and the major shareholder will probably be the party stumping up.

And so shareholders should be expecting dilution but at that point the stock should be able to restart trading on AIM and the ASX. Self-evidently it will not fly. Indeed given the litany of failure that has marked Norseman’s market history there will be a stampede for the exit. But at least there can be an exit and if this is refinanced one assumes that its backers will see some value in it. Only when details of that financing and the business plan are made known can one arrive at a conclusion as to fair value.

But as I noted before it is not game over yet. There will be more news next week I suspect.

Tom Winnifrith writes for 10 UK and US websites and can be followed on twitter @tomwinnifrith

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