15/04/2009 - 22:00

New project adds weight to busy gold sector

15/04/2009 - 22:00


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THE gold mining industry continues to be a bright spot in Western Australia with the announcement this week of a new project and a new takeover battle.

THE gold mining industry continues to be a bright spot in Western Australia with the announcement this week of a new project and a new takeover battle.

The announcements by Regis Resources and Avoca Resources come as global miner Newmont moves toward the commissioning of Australia's largest gold mine at Boddington.

While gold production is set to rise in WA, Perth companies are also active developing gold projects in other regions.

Centamin Egypt is proceeding with construction of Egypt's first modern gold mine and early this month appointed Perth-based Barminco as its underground mining contractor.

The sector has been buoyed by the strong price of gold, currently trading around $US860 an ounce.

The weak Australian dollar means that, in local currency terms, gold is at record levels around $A1260 per ounce.

Regis Resources announced this week that it planned to proceed with development of its Duketon gold project near Leonora, at a capital cost of $125 million. Initial gold production will be 145,000 ounces for the first year.

The announcement will help Regis fend off a board spill proposed by a group of renegade shareholders holding a total of 10.7 per cent of Regis shares.

The shareholders have used their numbers to force an extraordinary meeting on May 4 that will vote on whether to remove existing directors.

Members of the so-called Associated Group of shareholders include former chairman of gold miner Equigold, Nick Giorgetta, and former Equigold executives Mark Clark and Morgan Hart.

Meanwhile, gold miner Avoca Resources has launched a $49 million all-scrip takeover offer for fellow gold producer Dioro Exploration, with two major shareholders already pledging acceptance for the takeover.

Avoca, which opened the Higginsville gold mine last year, said the combined entity would produce about 250,000 ounces per annum in fiscal 2010 and hold assets that are likely to propel the production target to 500,000 ounces per annum.

Dioro currently has two gold operations, South Kalgoorlie and Frog's Leg, in which it has a 49 per cent interest.

Avoca said the close proximity of all three operations would provide operating synergies and an efficient management structure for all sites.

Newmont's Boddington gold mine will have annual production of 1 million ounces once it reaches full output in mid 2010.

Start-up of the project is expected in the middle of this year.

Newmont estimates the cost of the development will be up to $US2.9 billion ($A4 billion).

In other recent gold news, Navigator Resources bought the Bronzewing gold mine from administrators of View Resources for nearly $10 million.

Navigator will pay $9.55 million for the project, which includes a 2.3 million tonne per annum gold processing plant and a 280-person accommodation village.

Navigator will pay an additional $6.45 million for environmental bonds.

It intends to start processing at the operation, which already has underground mines, in November.


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