Bloomberg News – Carson Block, the founder of activist short seller Muddy Waters LLC, says nothing shy of a massive rally in gold will save Asanko Gold Inc. “At this point Asanko has backed itself into a corner and short of gold ripping to $1,700 an ounce, we don’t see how this company gets out of it,” Block said Wednesday in a telephone interview from San Francisco.
Asanko shares fell 13 percent to C$2.19 before trading was halted in Toronto on Wednesday. The Vancouver-based company, which mines gold in West Africa, had tumbled after Muddy Waters said it was shorting the stock, believing it “highly likely to end up a zero.”
Shares remained halted all day. In a statement just before the broader market closed, the company refuted the report and reaffirmed its production guidance for 2017.
“The short report has no merit,” Asanko Chief Executive Officer Peter Breese said in the statement. He added that the company’s June 5 feasibility study will “provide a complete rebuttal to Muddy Water’s technical claims and will also make other information available to refute the non-technical allegations.”
Spot gold was trading at about $1,268.90 an ounce at 4:07 p.m. in New York. Assuming gold trades at $1,200 an ounce the company expects to generate $64 million to $77 million in cash this year, it said.
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