White Dam likely to explain halt as Syrah goes for gold on...

White Dam likely to explain halt as Syrah goes for gold on resource production
Email Print Normal font Large font AdvertisementAdvertisementBarry FitzGerald
December 17, 2007
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RECENTLY floated Syrah Resources is looking to set some sort of record for making the transition from explorer to gold producer.

The Melbourne-based Syrah is in a trading halt and according to the gossip among a bus load of mining types out for a day at the races in Mornington on Friday, Syrah is about to pick up the advanced White Dam gold project in South Australia from Exco Resources.

White Dam is not the biggest gold project around, with its resource of 330,000 ounces of gold, including the nearby Vertigo deposit. But when your market cap is as tiny as Syrah's at a little more than $5 million (17.5¢ a share), it's a project well worth having. Syrah managing director Alistair Campbell said from day one of the float that his aim was to get Syrah into production quickly as it was better to have a self-funding cash flow than rely on equity markets for long-term funding. It's what you would expect from a mining engineer.

No confirmation of the deal with Exco just yet, but the word is that Syrah will take 80% of the action, and resources merchant banker RMB Resources is in for 20%. Exco's sale is no surprise given its ambitions in north Queensland with its Cloncurry copper project.

White Dam, 80 kilometres west of Broken Hill, was granted a mining lease in September and Exco has sorted out water supplies and all the other bits and pieces needed to kick off a mine development.

A heap-leach operation based on White Dam's open-cut oxide resources could be in production in the second half of next year. Annual production of 50,000 ounces for at least three years would be the plan.

On that score, Campbell has more experience than most with heap-leach operations.

Should it all come to pass, Syrah is in line for a fairly rapid re-rating.