100 g per tonne!

Cortona Resources Is Re-Awakening Interest In A Unique Piece Of Australias Mining History
By Our Man in Majors Creek



The last time gold and Australias capital, Canberra, were mentioned in the same breath was back in the 1990s when the Australian Government followed Britains example and sold most of its gold reserves for a pittance. On Monday, that will change because a small Australian explorer is expected to report bonanza drill results which should guarantee the return of gold mining to Majors Creek, site of one of the countrys original gold rushes and located an hours drive from central Canberra. Cortona Resources has, so far, attracted limited interest to a project which has outlined a modest resource of 286,000 ounces. That will change as the latest drill results are factored in, with assays tipped to top 100 grams to the tonne, and Minesites Man in Oz is confident that he saw some of that remarkably rich drill core when visiting Majors Creek earlier today.
Investors have not had a chance to act on the speculation swirling around Cortona, though, as the company placed itself in a trading halt yesterday as it drafted a report which management says will be filed at the ASX before trading starts on Monday. After it reports, Australian investors will get first crack at Cortona, which last traded at A15.5 cents, but London investors also have a long-standing interest, because Majors Creek is far more than a modern gold discovery in a curious location, it is a place which first generated fat profits for City investors in the late 1800s. It then sent just as many broke when at least six London-listed companies collapsed as mines in the area failed to make the transition from soft to hard ore.

From its glory days up to 1910 the alluvial workings, and a handful of deep mines, produced more than 1.3 million ounces of gold. For the next 100 years Majors Creek, and a number of other historic digs, were converted into farmland, or drifted into neglect. All that remains today are scars on an otherwise pleasant landscape of cattle and sheep grazing properties. Repeated attempts to develop a modern mining industry failed. Owners before Cortona include the once-famous BH South, Horizon Pacific, and Moly Mines. It was Moly which sold the 700 square kilometre exploration tenement into Cortona in order to focus on its Spinifex Ridge molybdenum project in Western Australia. Moly kept a minority stake in Cortona, but the next few months will tell whether the sale, and a decision to not participate in a recent A$10 million capital raising was a bad move.

Cortona chief executive, Peter van der Borgh, is circumspect when discussing Molys gradual exit from his share register. He is far more interested in discussing the five-rig drilling programme underway at Dargues Reef, which is the primary focus of current work in the greater Majors Creek project, and the reason Minesites Man in Oz became Minesites Man in Majors Creek for a day. The results were getting add to our confidence that we will be able to soon report a substantial increase in the resource at Dargues, Peter said while showing diamond drill core taken from the holes which will be the subject of Mondays ASX report.

Without being assayed it is impossible to tell how much gold is in the latest batch of core extracted from Dargues Reef. However, it does have one attribute not always seen in modern exploration: visible gold; the same stuff that was chased by the old-timers before they hit rock which was too difficult to process, even if it did grade 14 grams to the tonne. If Cortona can latch onto a sizable deposit of material that rich it will be well on the way to launching a very profitable goldmine.

The next few months will be critical for the company. The five-rig drilling programme is chewing through Cortonas cash at a rate of close to A$2 million a quarter. The aim is to establish a resource of more than 500,000 ounces by mid-year, and then to press the button on a relatively small starter project. This will have a capital cost of around A$35 million, and ought to yield around 50,000 ounces a year at a cash cost of A$470 per ounce and an all-up cost of A$700 per ounce. And that should be sufficient to generate an annual profit of around A$18 million, not much less than the companys current market value of A$22 million.

But Dargues Reef should be just the beginning for Cortona. Miners in the 19th century had no way of testing the structures which lie at depth, and were forced to focus on alluvial gold in creek beds, and shallow diggings. The deepest mine at Dargues Reef did not pass the 100 metre mark, possibly missing the best material. The latest assays officially reported by Cortona in mid-March were from a depth of 330 metres and included an eye-catching 12.4 metres at 16.3 grams per ton, with a central slice assaying 43.9 grams per ton over 3.5 metres.

The next assays, and those which caused Peter to request the voluntary trading suspension, are from deeper yet, at around the 450 metre level. Persistent questioning from Minesites Man in Majors Creek failed to extract detail of the pending assays but that has not stopped speculation that a six metre section has returned a result of more than 100 grams per ton. What I can say is that deeper we go the more it seems to be blowing out, Peter said. Adding to interest in the steady plunge deeper is an ultra-deep test hole currently going down as part of the current work. It has a total planned depth of 1000 metres, but should hit the Dargues Reef structure at around 600 metres from the surface, potentially adding another 150 metres of mineralisation to the resource.

For London investors, Cortona is a window on the re-awakening of a unique piece of Australian mining history. The Dargues Reef work has the potential to become the companys first mine, and is unlikely to be the last in the area. But, as fascinating as the history is, and the current drilling results are, its probably worth remembering that somebody somewhere in the City has a share certificate on the wall issued 100 years ago by Majors Creek Proprietary Goldmining Company a business which lived for 12 months in 1910, and then disappeared without trace.