WITH gold edging close to breaking the $US300 per ounce barrier, interest in mid-sized Australian producers has been rekindled.
WITH gold edging close to breaking the $US300 per ounce barrier, interest in mid-sized Australian producers has been rekindled.
Combined with healthy drilling results, this represents a recipe for strong investor interest, as has been the case for Sipa Resources International.
Sipa has languished below 10 cents a share for more than 12 months, but a market announcement in January that drilling work was being carried out at the Waugh Gold deposit pushed the price beyond 25 cents.
By the end of January the price had moved as high as 42 cents, before settling back 10 cents to sit earlier this week at 35 cents.
Since January 11, Sipa has drilled 190 holes at Waugh, a satellite deposit located just three kilometres from the 100 per cent Sipa-owned Mount Olympus, 600,000 tonnes per annum carbon-in-leach treatment plant at the Paraburdoo Gold Project in the Pilbara.
Sipa purchased the Paraburdoo Gold Project and the Lynas treatment plant from Lynas Corporation Ltd for $5.5 million in November, with Lynas refocusing its interests into Rare Earth mineral and metal production.
Sipa managing director Mike Doepel said the assay data for the work was expected in the next week and would provide a resource estimate shortly after Easter.
“The Waugh Project is on track for mining in the second half of 2002, as all statutory requirements have been met and a Notice of Intent is being prepared,” Mr Doepel said.
A trial of the 350,000 tonne Mount Olympus medium grade stockpile has resulted in the predicted grade being revised upward from 1.1 grams per tonne to 1.98/tonne. A trial-processing program of the 815,000 low-grade stockpile also is expected to bring in improved grades.
Mr Doepel believes the improved grading has the potential to add a further 15 months of milling and, at current gold prices, could provide an additional $3 million in cash flow.
Sipa is also hopeful that the treatment plant could be utilised in the future by the Limerick Hill joint venture (30 per cent Sipa, Newcrest 70 per cent owned and managed), which is the surrounding ground holder to the Paraburdoo Gold Project.
DJ Carmichael senior analyst Peter Strachan said the high grade at Waugh of up to 75 grams per tonne in parts were significantly high grades and well above the 2 grams to 3 grams needed to make the project viable.
Mr Strachan said a quick estimate of the reserve based on an estimated size of the deposit of 200,000 tonnes with an average grade of around 15 grams per tonne could have a potential net present value of $11 million for the company based on an in-the-ground gold price of $US150 per ounce.
But Mr Strachan believes the market has already built the conservative figures into the current share price.
Combined with healthy drilling results, this represents a recipe for strong investor interest, as has been the case for Sipa Resources International.
Sipa has languished below 10 cents a share for more than 12 months, but a market announcement in January that drilling work was being carried out at the Waugh Gold deposit pushed the price beyond 25 cents.
By the end of January the price had moved as high as 42 cents, before settling back 10 cents to sit earlier this week at 35 cents.
Since January 11, Sipa has drilled 190 holes at Waugh, a satellite deposit located just three kilometres from the 100 per cent Sipa-owned Mount Olympus, 600,000 tonnes per annum carbon-in-leach treatment plant at the Paraburdoo Gold Project in the Pilbara.
Sipa purchased the Paraburdoo Gold Project and the Lynas treatment plant from Lynas Corporation Ltd for $5.5 million in November, with Lynas refocusing its interests into Rare Earth mineral and metal production.
Sipa managing director Mike Doepel said the assay data for the work was expected in the next week and would provide a resource estimate shortly after Easter.
“The Waugh Project is on track for mining in the second half of 2002, as all statutory requirements have been met and a Notice of Intent is being prepared,” Mr Doepel said.
A trial of the 350,000 tonne Mount Olympus medium grade stockpile has resulted in the predicted grade being revised upward from 1.1 grams per tonne to 1.98/tonne. A trial-processing program of the 815,000 low-grade stockpile also is expected to bring in improved grades.
Mr Doepel believes the improved grading has the potential to add a further 15 months of milling and, at current gold prices, could provide an additional $3 million in cash flow.
Sipa is also hopeful that the treatment plant could be utilised in the future by the Limerick Hill joint venture (30 per cent Sipa, Newcrest 70 per cent owned and managed), which is the surrounding ground holder to the Paraburdoo Gold Project.
DJ Carmichael senior analyst Peter Strachan said the high grade at Waugh of up to 75 grams per tonne in parts were significantly high grades and well above the 2 grams to 3 grams needed to make the project viable.
Mr Strachan said a quick estimate of the reserve based on an estimated size of the deposit of 200,000 tonnes with an average grade of around 15 grams per tonne could have a potential net present value of $11 million for the company based on an in-the-ground gold price of $US150 per ounce.
But Mr Strachan believes the market has already built the conservative figures into the current share price.
