Southland doubt triggers gold chop

CONTINUING uncertainty on re-entering the Southland mine and resuming operations has prompted Gympie Gold receivers to sell the Eldorado gold mine.
Southland doubt triggers gold chop Southland doubt triggers gold chop Southland doubt triggers gold chop Southland doubt triggers gold chop Southland doubt triggers gold chop

Southland colliery.

Michael Quinn

The Queensland gold mine was put on the market yesterday by Andrew Love, the receiver and manager appointed to the mine's owner Gympie Gold following the fire on Christmas day at the company's Southland colliery.

Love said significant effort and money had been spent with Thiess contractors with a view to assessing at the earliest opportunity the prospects or otherwise of re-entering Southland and recommencement of mining operations.

“At present we are still unable to provide a conclusive timetable as to when this will occur and this position is being monitored on a week by week basis,” said Love.

He said gas monitoring at the coal mine indicated the fire appeared to have been contained.

A bore hole was being drilled to lower a camera and other instruments some 450 metres to a target destination between the postulated source of the fire and the longwall unit.

The results will be known within two weeks but Gympie stressed they may be inconclusive.

At the same time it is planned to reventilate part of the mine at very low volumes in an attempt to clear residual gases produced by the fire in the area of the longwall unit.

Whilst efforts are made to determine the damage at Southland, receivers have kick started the international sale process for the company’s gold assets.

The Gympie mine produced 55,386 ounces last financial year at cash costs $350/oz and had reserves in mid-2003 of 161,000 ounces and resources of 686,000 oz. Similar output was expected in the fiscal 2004.

Love said the mine has already attracted a significant amount of interest from local and international parties, with various shareholder and investor groups also putting their hands up.

Assisting in the sale process will be well known resource investment banker Ronnie Beevor.

Analysts said the market was good for gold projects, though Gympie's small reserve position is seen as a possible disincentive.

Exploration has been the main focus for the company in recent times, with the mining and milling seen by Gympie Gold as providing it with a "platform" for exploring the rich 4 million ounce goldfield where the mine is located.

The company said last year it was reasonably confident it would discover at least 2Moz.

Included in the asset sale is a 25% stake in D'Aguilar Gold, an exploration company that raised $4 million in an IPO last year on the back of of ground west of Gympie.