Gold promise gets more scrutiny

BILL MOORE
Last updated 13:00 01/05/2012

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Promising results from the Sams Creek goldfield in Golden Bay have prompted miner OceanaGold and MOD Resources into a second phase.

Perth-based MOD, doing the exploration under a joint venture arrangement with Oceana, which holds the permit, has reported to the Australian Securities Exchange that the initial drilling programme was completed on budget of $2.4 million, and ahead of schedule. Work began in October.

Assay results from the nine-hole programme were "highly encouraging", it said.

MOD chairman Miles Kennedy said the results justified further evaluation of the true mineral wealth of Sams Creek, with the aim of significantly increasing the size of the existing estimate of a 770,000-ounce gold reserve, worth about $1.56 billion at yesterday's price of $2024 an ounce.

"Just as importantly, the drilling work we have completed at Sams Creek has justified a five-year extension of the permit, which is a key milestone for the project. This enables us to plan our next stage of exploration," Mr Kennedy said.

In its report to the ASX, MOD described Sams Creek as New Zealand's biggest undeveloped gold project.

Discovered by CRA Exploration (now Rio Tinto) in 1974, the field is 25km south of Takaka in the Cobb Valley, and divided into a number of exploration prospects including Riordans, Western Outcrops, Doyles, South Eastern Traverse, MainZone and Anvil.

Mining of the area is opposed by Forest & Bird, which fears the effect that tailings would have on the Takaka River and tributaries, and underground aquifers.

It also has concerns about the effect on the Cobb road, the only vehicle access into the area, which is conservation land adjoining Kahurangi National Park.

But MOD has said the evaluation phase could take several more years and every step is being taken to ensure that the exploration will have minimal environmental impact, including flying in the drilling rigs by helicopter.

OceanaGold is listed in Australia and New Zealand, and operates this country's largest gold producing operation, the Macraes open pit and Fraser's underground mine in Otago, and the Reefton open-pit mine.

Macraes has produced more than 3 million ounces of gold since opening in 1990. The Reefton mine was commissioned in 2007 and produced more than 85,000 ounces of gold in 2010.

Meanwhile, another listed Australian company, Strategic Elements, has applied to explore Golden Bay's historic West Coast goldfields in the Anatori area in the belief that new techniques could yield more riches.

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- © Fairfax NZ News

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