June 30, 2002
By Wayne Heilman The Gazette
Investors in Golden Cycle Gold Corp. are reaping the rewards of years of patience - the company's stock price has nearly tripled in the last five months.
The Colorado Springs-based gold company has benefited from a nearly 20 percent jump in gold prices during the past year to the highest levels since 1997.
That means a Golden Cycle share bought for $4.25 on Jan. 29 is now worth $13 in trading on the Pacific Stock Exchange.
The company owns one-third of the state's largest gold mine, near Cripple Creek, and also owns gold deposits in northern and eastern Nevada.
The company also has formed a joint venture with a California mining firm that hopes to soon acquire gold deposits in southwestern Colorado.
The stock briefly reached $13 in 1999, but it has spent most of the last five years drifting down from about $9 in early 1997 to $4.25 in January.
However, political and financial uncertainty, along with the declining value of the dollar, has fueled rising gold prices and Golden Cycle's stock price.
The company wants to become an exploration arm for the world's largest gold companies, which have reduced exploration as they acquired reserves through mergers.
Golden Cycle has bought some promising deposits it will continue to explore, then resell to the giants while retaining an interest in future production.
Golden Cycle will concentrate its acquisitions in Colorado and other Western states after exploration of deposits it bought in The Philippines during the late 1990s stalled because of political instability in that region.
Rising gold prices couldn't come at better time for the Cripple Creek mine, operated by AngloGold Ltd., which is just completing a $71 million expansion that will boost production by 60 percent.
The mine has deposits that will last at least 13 more years and AngloGold also has notified Golden Cycle that exploratory drilling has found potential new deposits.
Don't look for the money to start rolling into Golden Cycle's Tejon Street headquarters yet.
The Cripple Creek mine must repay $300 million in debts before Golden Cycle's shareholders start earning profits, and the company's exploration strategy is still in the early stages.
"Most of our shareholders are gold bugs - they believe in gold as an investment," said Golden Cycle President Herbert Hampton.
"That investment will look pretty good if gold prices go over $400 an ounce."