Black Cat Syndicate becomes a next-level gold bull after building stockpile in lieu of growing bank balance
A fledgling gold miner is so confident the precious metal’s price will continue to rise it has decided to stockpile at least $20 million of bullion instead of cashing in.
Perth-based Black Cat Syndicate is taking the unusual step of hording the gold bars churned out from ore processed through its Lakewood mill near Kalgoorlie and Paulsens mill in the East Pilbara.
Black Cat bought Lakewood from Westgold Resources in February for $85m and poured its first bar of gold doré at the site in April.
The company plans to build up and store a minimum of about $20m worth of gold, which at current prices equates to roughly 4000 ounces of bullion.
By the end of May, about $24m had been retained.
“While Black Cat is not a bullion bank, we are not a cash bank either,” managing director Gareth Solly said.
“It is hard to justify producing a safe haven asset, in gold, and then converting that asset into an asset losing its purchasing power, in cash.
“After working capital and growth requirements, we are setting $20m of gold aside, comfortable in the knowledge that gold is a high-quality, liquid asset.
“At the end of the day, we are in the gold business and investors can choose Black Cat because they are seeking leverage to gold. And yes, the gold price could go down, and we will hold sufficient cash to cover such a contingency.”
Black Cat had $65.4m cash on hand at the end of the March quarter. Shares in the miner were up 1.1 per cent in early Monday trade on a down day for gold stocks after big gains last week.
UBS on Monday reaffirmed its long-term gold price prediction of $US3600/oz.
Gold is currently around $US3430/oz, hovering near the $US3500/oz record it hit in April, as the threat of an all out war between Israel and Iran induces another burst of demand for the safe haven asset.
