LONDON (Alliance News) - Kolar Gold Ltd shares plummeted on Tuesday after launching a strategic review to explore all of the options available to try to keep the company alive beyond the end of calendar 2016, as Chief Executive Nick Spencer left the company with immediate effect.
Kolar shares were down 25% to 0.753 pence per share on Tuesday morning.
The review could lead to Kolar selling its assets or the entire company, including the prospect of delisting from AIM, or potentially looking at opportunities outside of India where it is currently focused.
However, the board said it will consider winding up the company and returning cash to investors if they are "unable to see a long term future" for the company.
In tandem with the launch of the review, Spencer has resigned, as has Non-Executive Stephen Coe. Kolar did not state why Spencer was leaving, but said Coe was departing for "personal reasons".
Other directors on the board, mainly comprised of representatives from Geomysore Mining Services (India) Private Ltd and SUN Group, will "step up to a more active role" in managing the company's Indian assets. Spencer will continue to assist the board until his contract formally expires in May 2016.
Kolar has a 23.5% stake in Geomysore Mining, whilst SUN Group also holds a material stake in Kolar.
Kolar said it will review its board composition and management in May.
The significant changes come as Kolar reported a GBP1.3 million pretax loss in the last financial year ended June 30, narrowing from the hefty GBP5.6 million loss a year earlier. Kolar does not generate any substantial revenue, with the loss narrowing because of lower impairments and administrative expenses.
Kolar's assets include that 23.5% stake in Geomysore Mining and a right of first refusal to acquire mining assets owned by Bharat Gold Mines Ltd through a tender process. It also has around GBP1.0 million in cash.
Kolar has been trying to acquire Bharat Gold Mines through its stake held in Geomysore Mining, but said this has taken "significantly longer" to progress, with the environment worsening since that strategy was initiated.
"Kolar Gold's ability to continue with its current strategy is constrained given its present cash resources and the current equity market environment for junior exploration and mining companies," said Kolar.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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