Ashurst may end its gold adventure Ukrainian project could be abandoned in quest to turn a profit


January 23, 1998|By Ted Shelsby | Ted Shelsby,SUN STAFF

Ashurst Technology Ltd., which has its research and development center in Relay, is considering abandoning its involvement in a Ukrainian gold mining venture as part of a corporate restructuring designed to make the company profitable.

Stephen Meldrum, vice president of marketing, said yesterday that Ashurst's continued participation in the Ukrainian gold program is under review by management and the company's board of directors.

He said there is a possibility of ending the gold venture, "but we would not do so without first attempting to get our investment out of it." He estimated that Ashurst has invested about $4 million in the venture to date.

In March, Ashurst announced that it had reached an agreement with a Ukrainian company that would give Ashurst a 25 percent stake in what it called one of the most significant gold deposits in the world.

Under terms of the agreement with Ukrzoloto, a Ukrainian state company in Kiev, Ashurst was to serve as a consultant and do finance feasibility studies related to the mining of gold from eight sites throughout Ukraine. The cost to Ashurst was estimated to run between $20 million and $30 million.

Ashurst said that, under the direction of Steven A. Gedeon, the newly appointed chief executive officer, the company will focus all resources on its patented advanced scandium alloys and other light metals businesses.

Meldrum said a lot of shareholders would like the company to devote its time and energy to the development of new alloys and make the company profitable. Ashurst posted a loss of $9.4 million last year on revenue of $3.01 million.

Gold has dropped sharply in price in the past year.

"It is no longer an attractive area for investment," said Stanley Lanzet, an analyst with Lanzet Global Securities Corp. in New York. "What made sense a year ago no longer makes sense."

Ashurst, which is based in Bermuda, holds a 43 percent stake in the Zhovti Vody mine outside Kiev that was once a major harvesting ground for iron ore and uranium for the Soviet military.

The giant mine, with more than 200 miles of tunnels, is also the world's primary source of scandium, a rare metal known for its toughness. Adding just traces of scandium to aluminum increases the weldability of the alloy.

Other benefits include increased strength, durability, plasticity and fatigue resistance.

Ashurst develops new commercial markets for scandium in the West and has already experienced some success.

Last February, it licensed California-based Easton Sports Inc. to manufacture and market baseball and softball bats made from its proprietary aluminum-scandium alloys.

In September it reached another agreement with Easton to make lightweight bike frames using scandium.

The same month it joined forces with STX Inc. of Baltimore to produce and market lacrosse sticks made from the alloy.

"We are aggressively pursuing the golf industry now," Meldrum said.

He said the company also is talking with aerospace companies around the world about using scandium in the construction of structural parts for commercial and military airplanes.

As part of the restructuring, Meldrum said, the company also is looking at the possibility of closing a scandium-stockpiling operation in Ireland and moving it to the Baltimore area. And, he said, the company is considering closing an office in Toronto that was involved with its gold venture.

Lanzet said a lot of investors want Ashurst to be more focused. "They can be a great scandium company, and, basically, that is what they are doing," the analyst said.

Pub Date: 1/23/98

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