articles of interest

Cashed-up miner's gold bug
Jun 22, 2009 8:31am

WITH a recession looming and talk of inflation, bullion is back in favour.

Answer: Straits Resources (SRL), which seems to be one of those middle-ranking miners that never quite manages to get the spotlight focused on it. Of course, its previous mix of coal in Indonesia and base metals here was fairly unglamorous and, we admit, a trifle dull.

Now word has trickled back through various channels that there are some gold bugs out there who think Pure Speculation has lost its enthusiasm for the yellow metal. Au contraire.

At the weekend we have heard international investment star Marc Faber -- who picked the 1987 crash and the post-2002 gold boom -- talking about the US having annual inflation of up to 20 per cent. And not just the US, he added -- any country that has injected huge liquidity into its financial system faces the same risk. Are you listening, Wayne and Kevin?

Sort of makes you think a little bit of gold in a safe deposit box wouldn't be a bad idea, doesn't it?

Straits Resources has just sold its controlling stake in the Singapore-based subsidiary, which mines coal in Indonesia and has exploration ground in Madagascar and Brunei, to Thailand's PTT Group for $US335 million, following which the Sydney-based miner has been acquiring some interesting gold assets.

Apart from the struggling Mt Muro mine in Indonesia, SRL has long held a 55 per cent stake in Toronto-listed Goldminco Corp, which holds more than 2000sqkm over the Lachlan Fold belt in NSW. Two months ago Goldminco upgraded the resource at its Discovery Ridge project south of Orange to 309,000 ounces of gold.

SRL more recently injected $3.5m into Adamus Resources (ADU), the company that recently gave the green light to mine 100,000oz a year in Ghana. On Thursday, Straits agreed to invest $3m in Guido Staltari's Saracen Mineral Holdings (SAR), which is reviving the former Sons of Gwalia Carosue Dam gold operation.

And there is another gold interest that seems to have escaped most people's notice: the 9 per cent stake in Lachlan Star (LSA), the former high-flying gold and coal play Gympie Gold.

Macquarie Group (MQG) is another stakeholder, but the biggest LSA shareholder is chairman Mick McMullen, who is at present based in Norway. McMullen, who is also MD at Northern Iron (NFE), and concentrating on getting that company's Norwegian iron ore mine into action, recently took the time to dash across to Toronto to sign a deal between LSA and Canadian-listed but rarely traded Luiri Gold. Lachlan Star will invest $3m in Luiri, dual-list it in Australia and essentially run the show. Luiri has 800,000oz of gold in Zambia.

These spends still leave SRL with a large pile of cash in the bank.

Chrome takes a shine

WHILE on the subject of gold, there was an interesting announcement from Chrome Corp (CCI) that, having sold its South African chromite interests, it is buying an unlisted public company that has 4000sqkm prospective for gold in three Papua New Guinea provinces. The people behind Pacific Nuigini Minerals are those who ran the former gold play Abelle before it was taken out by South Africa's Harmony Gold.

Apart from the fact that Peter Cook, the former Abelle MD and now the key man at tin miner Metals X (MLX), is joining the CCI board, the deal also brings in PNG geologist David Osikore and PNG resources player Bill Searson. The important thing is that both these men know which doors to knock on in Port Moresby.

Our man in the PNG capital tells us that government forecasts are for the country's gold production to increase 25 per cent this year to a record 82 tonnes.

Meanwhile, we are still waiting for news about a deal involving another PNG hopeful, National Stock Exchange listed Anomaly Resources (NSX: ANJ) and cash-strapped Gold Aura (GOA). Everyone is being tight-lipped but we would still put our money on Anomaly taking control of GOA to get on the ASX and be able to raise money.

The key man behind Anomaly is Peter Macnab, who lives at Buka, the administrative centre of Bougainville, and was involved in several key PNG discoveries, including Lihir. He was the man the Australian government sent to map PNG mineral resources in the years before independence.

He is also on the board of another junior, Sierra Mining (SRM), a company that is largely preoccupied with gold in the Philippines. Work has been stopped on the company's PNG prospects as SRM seeks to preserve funds, so the board has left Macnab with the task of keeping an eye on these.

Given his pedigree, it is surprising that no potential farm-in partners have been sighted. The projects are both on small islands. Kairiru has been explored and encouraging gold grades found, but there has been almost no exploration at Rossel Island for 120 years. Keep in mind that PNG's first alluvial gold discovery, in 1888, was on the adjacent Tagula Island. Both Rossel and Tagula are part of the Louisiade Archipelago, which also includes Misima Island and its once rich gold and silver mine.

Just briefly ...

WELL, that's what happens when you get us started on gold. Room only for brief mention of other announcements worth noting.

* TEXAS oil billionaire T. Boone Pickens reckons natural gas prices in the US will double by next year to $US7 per 1000 cubic feet. This will be music to the ears of the dozens of Australian juniors drilling for gas or already pumping it in the US. In the past few days, AusTex Oil (AOK) reported first gas sales from its BlueHawk project in Oklahoma. And with crude at around $US70/barrel, Pryme Oil & Gas (PYM) will be seeing its revenues increase as its latest Louisiana well comes into production.

* BGF Equities says one of its preferred gold stocks is Tennant Creek explorer Emmerson Resources (ERM) now that Robert Friedland's Ivanhoe Australia (IVA) has both taken a placement and committed $18m in exploration spending. BGF points out that IVA is interested only in one million ounce-plus gold deposits.

* THERE was a lot of excitement in Perth at the news that Sandfire Resources (SFR) seems to have drilled into what appears to be a large ore body north of Meekatharra. Its stock went from 73c to $1.02 on Wednesday and was still holding at 92c on Friday when more heavy trading occurred as investors took advantage of Thursday's retreat.

The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice.

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