Kingsgate shares slump on $300m charge

KINGSGATE Consolidated shares have slumped after the gold miner announced job cuts and a $300 million impairment charge caused by weak gold prices.

Kingsgate said it would reduce staff as it undertakes a new mine operation plan at its Challenger gold mine in South Australia.

The company plans to cut mine development costs by 30 per cent and slash capital and operation expenditure.

"Given the new life-of-mine plan, the operational changes at Challenger and the lower gold price environment, it is likely that a significant non-cash impairment charge in the order of $300 million will be made against the carrying value of Challenger as part of Kingsgate's 2012/13 financial accounts," the company said in a statement.

Part of the reduction in expenses would come from fewer employees, it said.

Kingsgate shares dropped by 9.5 cents, or 7.0 per cent, to $1.265.

Gold is trading around three-year lows at just above US$1,200 per ounce.

"The new mine plan is the result of a strategic review of the Challenger Gold Mine in response to recent gold price volatility and the operating performance over the last 12 months," Kingsgate said.

The Sydney-based company said it would shift its focus to the Challenger West ore body over the next three months.

The new mine plan has the potential to produce between 70,000 to 80,000 ounces for the next two to three years, the company said.

Over the next two months Kingsgate will undertake an estimation of its resources and reserves.

A new mining contract with lower mining costs is expected to be implemented from August 1.

The company expects to be cash flow positive by September at current spot prices.

Gold production at the Challenger mine was 87,388 ounces in fiscal 2012.

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Carr flags overhaul of refugee tribunals

THE federal government is set to overhaul Australia's refugee tribunal system in an effort to counter the recent surge in boat arrivals, claiming many are not bona fide asylum seekers, but actually economic migrants.

Foreign Minister Bob Carr said on Friday there was mounting evidence the Refugee Review Tribunal, for example, "had not been hard-headed enough" in assessing would-be refugees.

It has also been revealed that Senator Carr raised concerns with officials in Jakarta about a loophole in Indonesia's visa on arrival system, which was allowing asylum seekers to transit legally through the country's airports before taking boats to Australia.

Indonesian Justice and Human Rights Minister Amir Syamsuddin confirmed that abuses of the visa on arrival system, particularly by Iranian nationals, was one of the main areas of discussion in talks with Senator Carr in Jakarta on Friday.

Evidence has shown that Iranians are the largest proportion of asylum seekers eventually deemed to be economic migrants, and the greatest number in the recent spike in boat arrivals.

In a signal that Indonesia may be prepared to look at a possible crackdown, Mr Syamsuddin said his government was also concerned about the issue and it would be discussed again at a "higher" level.

"He raised his concern about lots of Iranian people using our (visa on arrival). But I reminded him as well that Indonesia also has concern over this matter," Mr Syamsuddin told AAP.

"This matter shall definitely go to a higher forum."

Senator Carr refused to comment directly on the visa issue.

However, he identified Iran and Pakistan as the main source of so-called economic migrants, adding that in some cases boats had arrived where 100 per cent of those on board were clearly seeking better economic conditions rather than fleeing persecution.

As part of the overhaul of the refugee tribunals, Australian diplomats in source countries would be called on to make a greater contribution to the assessment process.

"There's some evidence that the tribunals have not been hard-headed enough in looking at the circumstances (in those countries)," Senator Carr said.

"My department is going to produce some hard-edged assessments of the situation in the countries from which asylum seekers come that can guide the bodies making determinations in Australia, the tribunals and the courts, about the real status of conditions in these countries."

Senator Carr also met with Indonesian Foreign Minister Marty Natalegawa and was expected to hold talks later in the day with Coordinating Minister for Security and Law Djoko Suyanto, where people smuggling was set to remain the focus of discussions.

He said comments by Prime Minister Kevin Rudd in which the Labor leader warned that a Tony Abbott-led government, because of his policy of turning boats back, would "risk conflict" with Indonesia, had not been raised with him in his discussions in Jakarta.

Senator Carr said the relationship with Indonesia was "working very well at the moment.

"Tony Abbott's rhetoric is a threat to that," he said.

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Bishop arrested in Vatican bank probe

A BISHOP has been arrested in connection with the sweeping probe of the scandal-plagued Vatican bank, known as the Institute for Works of Religion (IOR), Italian media reports.

The Corriere della Sera website alleged on Friday that the arrested cleric was Nunzio Scarano, the bishop of Salerno in southern Italy.

Silverio Sica, lawyer for Monsignor Scarano, said his client is accused of fraud, corruption and other charges stemming from a purported plot to bring 20 million euros ($A28.29 million) into Italy from Switzerland aboard an Italian government plane.

The plot never got off the ground, Sica said. He told The Associated Press that Scarano was a middleman in the operation: Friends had asked Scarano to intervene with a broker, Giovanni Carenzio, to return 20 million euros they had given him to invest.

Sica said Scarano persuaded Carenzio to return the money, and an Italian secret service agent, Mario Zito, went to Switzerland to bring it back aboard an Italian government aircraft.

He said the plot failed because Carenzio reneged. Carenzio and Zito also were arrested.

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SA formally signs Murray water plan

SOUTH Australia has formally signed the Murray-Darling Basin Plan, which Premier Jay Weatherill says will deliver certainty for the state's irrigators and river communities.

The intergovernmental agreement with the commonwealth and other basin states outlines how all jurisdictions will work together to deliver the plan to manage the river system.

"The state government is committed to a healthy and resilient future for the River Murray system," Mr Weatherill said.

"The Murray-Darling Basin Plan will ultimately return 3200 gigalitres of water to the river system, which will be critical to maintain the health of the river's floodplains and the internationally-recognised wetlands of the Coorong, lower lakes and Murray mouth region."

River Murray Minister Ian Hunter said the state government would now move forward with an implementation strategy until 2019, when the plan takes full effect.

Opposition environment spokeswoman Michelle Lensink called on the government to release details on how local irrigators could access extra federal funding under the new agreement.

"Whilst the state Liberals welcome the additional $445 million in federal funding, concerns in how this will be allocated and more importantly, when, is of great concern," she said.

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Toll Holdings warns of job cuts

TRANSPORT and logistics group Toll Holdings has warned it will cut jobs due to the poor performance of its global freight services business.

The comments came as the company announced a $200 million writedown on the value of its global forwarding business, which handles sea and air freight.

Conditions had deteriorated by more than expected in the last six months, the company said.

It is trying to slash expenses in the forwarding business, having already cut jobs - including closing a regional office in Zurich.

It aims to cut $15 million to $20 million in costs in 2014, and $40-$50 million longer term.

The division's largest cost base is its 5000 workers, managing director Brian Kruger told reporters.

"People understand that with the cost reductions a lot of them will come through labour number reductions ... clearly we try to manage as much of that as we can through natural attrition, but there will probably be some redundancies," Mr Kruger said.

Toll said the business had been impacted by a mix of soft demand for its freight services in a sluggish global economy, and competition from ship owners on the US-Asia route.

Toll offers distribution between countries for customers, but some larger customers are only interested in the sea journey and therefore deal with shipping companies themselves.

The global forwarding business, one of six segments within Toll, will post a loss of between $4 million to $8 million for the second half of the financial year, and a small profit for the full year.

He said Toll wanted to say involved in global freight forwarding services, and believed it was profitable, but would avoid any acquisitions for now.

Its sales staff were now concentrating on customers that were less attractive to ship owners and require its full services.

Despite the writedown, Toll reaffirmed its forecast for second half earnings of between $420 million and $430 million.

Its shares added 10 cents, or 1.9 per cent, to $5.35, in line with overall market gains.

The global forwarding business generates 15-20 per cent of Toll's revenue, with the company's other segments including logistics for mining companies, express and overnight parcel services and domestic freight.

The $200 million writedown on the global forwarding business is a non-cash impairment of goodwill, but it will push up Toll's debt to equity ratio.

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US expects more Taliban attacks

THE United States says it expects the Taliban to continue to mount attacks in Afghanistan even as the rebels hold peace talks from their new office in Qatar.

Taliban gunmen and bombers using fake NATO identification attacked an entrance to the Afghan presidential palace and a nearby building known to house a CIA base on Tuesday, leaving three security guards dead.

"Frankly I anticipate that Taliban will continue to try to negotiate from a position of strength," US special envoy to Afghanistan and Pakistan, James Dobbins, told reporters in New Delhi.

"The Taliban will want to continue to put pressure on, to make it look like the United States is leaving as a result of that pressure rather than a result of its success," he added.

Dobbins, who is on the last stop of a tour through South Asia, said he had briefed his Indian counterparts about the uncertain peace process, which has caused concern in New Delhi.

"They clearly had anxieties, anxieties that we all have. Nobody knows how this is going to progress," Dobbins said.

India, which has spent more than $US2 billion ($A2.17 billion) dollars of aid in Afghanistan, fears any return of the influence of the Taliban, hardline Islamists that are aligned with Pakistan.

India and Pakistan are locked in a fight for influence in Afghanistan, but Dobbins saw the prospect of improved relations between the neighbours which have fought three wars since independence.

In foreign policy matters, Pakistan's new Prime Minister Nawaz Sharif has made improving relations with India his "top priority," said Dobbins after his talks in Islamabad on Tuesday.

"Any improvement in India-Pakistan ties will almost automatically improve Afghanistan's situation," he added.

The Taliban opened an office in Qatar last Tuesday which was immediately mired in controversy after they used a flag and plaque which styled them as a government in exile.

The United States has pressed for a political solution to end the violence in Afghanistan ahead of the US-led NATO combat mission finishing in 2014.

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Sizzler weighs on Collins Foods

Collins Foods will review menus at its Sizzler restaurants following a drop in sales. Source: AAP

PROFIT at Australia's largest KFC franchisee has grown by 43 per cent, but investors are more concerned about its struggling Sizzler business.

Collins Foods made a $16.4 million net profit in the 12 months to April 28, up from $11.4 million in the previous 12 months.

However chief executive Kevin Perkins admitted Sizzler had underperformed in the year, and said its menus and restaurant formats will be reviewed to improve profitability.

"Price sensitivity and relevance have continued to affect sales in the highly competitive casual dining market," he said in a statement.

"Sizzler should benefit from the strategies being rolled out and review currently being undertaken."

Sales at Sizzler in the year to April 28 dropped by 2.4 per cent.

KFC's sales grew by 4.2 per cent, excluding the impact of new stores and store closures.

The company operates 122 KFC and 27 Sizzler outlets in Australia.

Collins Food shares were down one cent at $1.64 at 1543 AEST.

Mr Perkins said KFC's summer advertising campaign and cricket sponsorship helped boost sales, and "value deals" brought in more customers despite a weak retail environment.

"We expect the positive sales trend for KFC to continue and have a solid pipeline of new restaurants and refurbishments planned for the coming year which should support further growth," he said.

But the carbon tax and weaker consumer sentiment remain a challenge, Mr Perkins added.

AAP saj/dm

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Gillard survives final caucus meeting

As the Labor leadership rumours continue, Julia Gillard will face a caucus without Kevin Rudd (pic). Source: AAP

PRIME Minister Julia Gillard is maintaining her grip on the leadership as the window for a change to Kevin Rudd narrows.

Mr Rudd is due to fulfil a long-scheduled appointment by flying to Beijing on Thursday afternoon to give a speech at a global summit alongside former US secretary of state Henry Kissinger.

With parliament sitting for its last week before the election, this leaves Wednesday or Thursday morning for caucus to respond to a possible petition for a special meeting to deal with the issue.

As of Tuesday evening there was no sign of a petition, which requires 34 signatures.

Labor backbencher Graham Perrett challenged those still unhappy with Ms Gillard to call a ballot.

"Rather than going on TV to talk about it, go and get ... other names," he told reporters.

The leadership issue was not discussed at the final scheduled caucus meeting in Canberra on Tuesday.

But Ms Gillard faced a pointed question from Rudd-backer Jill Hall, who wanted to know why MPs had not received a detailed briefing on the party's election strategy.

Ms Gillard was also pressured by MPs advocating a change of approach to asylum seekers, with another Rudd-backer Laura Smyth unsuccessfully moving a motion to soften the government's "no advantage" test applying to boat arrivals.

While polls indicate Labor could lose almost half of its lower house seats, the prime minister told colleagues the government's electoral strategy was clear.

The three key issues will be extra school funding, the disability care scheme and the national broadband network, showing voters Labor is "investing in the future", she said.

Ms Gillard, who has posed for a photograph showing her knitting a toy kangaroo for the next royal baby, has also given an upbeat assessment of Labor's election prospects in an interview with The Australian Women's Weekly magazine to be published this week.

"I believe we can win seats, the seats necessary to have a majority Labor government," she says.

"We've certainly got our eyes on running this election to win."

Mr Rudd was not at the caucus meeting, as he was travelling to Sydney to attend a memorial service for Hazel Hawke, the former wife of former Labor prime minister Bob Hawke.

Ms Gillard also attended the service but travelled separately by government jet.

Deputy opposition leader Julie Bishop said she was given Mr Rudd's spot on the jet because he had rejected Ms Gillard's offer of a lift.

Resources Minister Gary Gray said he expected Mr Rudd would go to China as planned.

Opposition Leader Tony Abbott told his final coalition party room meeting for the year the election would be closer than polls suggested and Ms Gillard would be "tough and ruthless" when it came to campaigning.

Mr Abbott used question time, from which Ms Gillard was absent, to grill Deputy Prime Minister Wayne Swan on the economy and an upcoming rise in the carbon tax from $23 per tonne to $24.15 on July 1.

Mr Swan was forced by the Speaker to withdraw a comment made under parliamentary privilege that Mr Abbott was "drunk" when Labor's stimulus bills went through parliament in early 2009.

Former Labor minister Graham Richardson says there's pressure on Mr Rudd to contest the leadership this week and he had the numbers in caucus to win.

"I don't have evidence that he is definitely going to do it," Mr Richardson told Macquarie Radio.

"But I do know there has been movement in the Gillard camp and I now have no doubt he has the numbers - he has towards 60 now (out of the 102 member caucus).

"And so if he runs he must win and I think the pressure on him to run will be enormous."

Mr Richardson said he expected there would be a challenge on Thursday and Mr Rudd would win it.

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Newcrest brings on its own investigation

Gold miner Newcrest will conduct an independent review of its market disclosure practices. Source: AAP

GOLD miner Newcrest has brought in an experienced banking and financial executive to review its disclosure practices amid a scandal over recent announcements to the market.

Newcrest is currently under investigation by the Australian Securities and Investments Commission (ASIC) for events leading up to the company's announcement of a $6 billion writedown earlier this month.

The company's shares plunged in the days leading up to the announcement, and there have been claims Newcrest tipped off some analysts about the writedowns before making an announcement to the market.

Newcrest has recruited former ASX chairman Maurice Newman to conduct an independent review of its disclosure and investor relations practices, it announced on Tuesday.

"Whilst the board is already reviewing events leading up to 7 June 2013, we have decided to obtain an independent perspective," Newcrest chairman Don Mercer said on Tuesday.

Mr Newman worked for 40 years in stockbroking and investment banking.

He will provide a report to the Newcrest board as soon as possible, including recommendations for any improvements or changes in the company's disclosure practices.

"If steps are required to be taken as a result of the review of these matters, the board will ensure that this occurs without delay," Mr Mercer said.

"I intend to report publicly on any resulting actions we decide are necessary."

Chief executive Greg Robinson said Newcrest would continue to cooperate fully with any and all information requests and queries from the regulators investigating the company's recent disclosures.

Newcrest shares have fallen to decade-long lows since the writedowns were announced, and lost a further 23 cents, or 2.4 per cent, to $9.30 on Tuesday.

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Gaming firms score court win over Vic govt

Two leading gaming companies have won a court battle against the Victorian government. Source: AAP

VICTORIA'S two big gaming companies have won court action against the state government over levies of more than $42 million imposed on them.

The Victorian Supreme Court on Monday ruled in favour of Tatts and Tabcorp in their joint legal action against the Victorian Treasurer Michael O'Brien, challenging his determination that they each pay health benefit levies of about $42 million for the 2012/13 financial year.

The companies say they operated gaming machines in Victoria for only 46 days of the financial year, losing the right to operate poker machines in venues other than Melbourne's Crown Casino on August 15, 2012.

On Monday, they issued statements on their court win.

"The court found in favour of Tatts and set aside the treasurer's determination to impose a health benefit levy upon Tatts in the amount of $42,607,106," Tatts said in the statement.

"The court found that the treasurer was not compelled to make a determination in this amount and that he erred in making the determination on the basis that he had no discretion."

Tatts said it was waiting for the treasurer to reassess the levy "by the proper exercise of his discretion."

Tatts had set aside about $7 million to pay the health benefit levy.

In its statement, Tabcorp said the matter will go back to the Victorian government to make a fresh determination on the levy.

"Tabcorp intends to submit to the Victorian government that the discretion should be applied to calculate the levy on a pro rata basis, referable to the 46 days Tabcorp operated gaming machines in the 2013 financial year."

The health benefit levy was introduced in July 2000 and applied to poker machines operated in Victoria to help fund hospitals and charities.

After the court ruling, Mr O'Brien issued a statement in which he said the health benefit levy operates under legislation introduced by his Labor predecessors.

He said the government would respond to the judgment in due course.

"The coalition government is determined to put Victorian taxpayers first in seeking a resolution to this matter," he said.

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