Gold shares: Simmers not for the faint-hearted

Gold Investment - 30 June 2010

Gold investors who are not scared to take substantial risks might want to invest in the JSE-listed junior gold producer/explorer Simmer and Jack Mines (Simmers). The share price of Simmers has come down considerably from a high of R8 in 2007 to the current share price of more or less 96c.

Download the full set of 2010 financial results here.

Not for the faint-hearted… 

An investment in gold by investing in gold shares is 9 times out of 10 plagued with substantial risks, especially when it’s done in a junior gold producer/explorer. The same is true for Simmers if one considers some of the factors that have negatively impacted on their 2010 financial results: 

• Shareholder dispute – Without necessarily wanting to fuel arguments on either side or to go into much of the details, it’s clear that the shareholder dispute that has erupted at Simmers can for most part be placed firmly in front of Vulisango Holdings (Pty) Ltd. This is not the kind of thing that’s appreciated by investors, Black and White we should add, because it has been at best disruptive and has destroyed a lot of shareholder value. Hopefully the shareholder dispute is now something of the past, especially considering the substantial changes that were made to the Simmers board of directors. Needless to say, Vulisango has managed to swing the board to their liking, so if Simmers fails to deliver in the current financial year, then this time around they will only have themselves to blame. It’s pretty much the story of South Africa, isn’t it? It’s after all easier and more politically correct to blame someone else for your failures. In fact, if it was not for the Tau Lekoa acquisition initiated by the previous board, then the current board would have had very little to build on. 

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