Lycopodium stock drops on Ghana mine halt

Consulting engineering group Lycopodium’s strong share price run was severely checked yesterday after the company revealed that its flagship project in Ghana had been put on ice by owner Newmont Mining.

Shares in Lycopodium slumped as much as 10 per cent, slicing almost $12 million from the company’s market value, and sent a stark reminder to its fast-running peers just how punishing the booming market can be when it comes to bad news.

Lycopodium finished the day 16¢, or 5 per cent, weaker at $3.19 after touching a low of $3.04. But the shares have added more than 30 per cent in the past 12 months, surging from a $1 listing price in late 2004.

Lycopodium said the development of Newmont’s $US500 million ($663 million) Akyem gold project in Ghana, which had been slated to produce 500,000 ounces of gold a year, had been deferred for 2006-07.

“The stated reasons by Newmont for the deferment are to complete permitting and resolve country-wide power shortages,” it said.

“Lycopodium had budgeted $15 million revenue from the Akyem project for the balance of the 2006-07 financial year. The company believes there is sufficient work available to replace this referred revenue, however, there may be some financial effect in 2006-07 because of project lead-time.

“The directors are not able at this time to quantify the financial effect.”

Lycopodium executive chairman Mick Caratti said the sharemarket reaction did not surprise given the company’s tight shareholding structure and low trading volumes.

“We’ve always taken a long-term view and built the company on a long-term view and conservative approach,” he said.

Lycopodium last month booked a 41 per cent increase in annual net profit to $7.6 million as revenue from its mining and industrial activities climbed 22 per cent to $84.2 million.