This article featured in MINESITE a london based mining news...

This article featured in MINESITE a london based mining news site

Feature Story
Date: February 18, 2005
   
Kate Hobbs, Boss Of Austminex, Shoots For The Title Of The Coolgardie Consolidator.

By Our Man In Oz

A brief flurry of excitement on the Australian Stock Exchange has quickly faded for Kate Hobbs, the jovial geologist and chief executive of Austminex, who is angling for the title of The Coolgardie Consolidator. From a lowly A8.6 cents a share just before a potentially company-making announcement on February 7, Austminex scaled the dizzy heights of A9.7 cents, before sagging back to a rather sad looking A7.9 cents. Hobbs, no doubt, considers this awfully unfair, and she may be right because the timing of her announcement was horrid, catching a slide in the gold price to US$411.10/oz, its lowest this year, and by the time the market had picked up everyone was looking the other way at fresher deals.

However, a trip back to the original announcement may be a fruitful exercise because Austminex has put itself into a unique position as the dominant player in the Coolgardie district of central Western Australia, an address for gold that at one stage was better known than its neighbour 40 kms to the east, the Golden Mile of Kalgoorlie. The big difference between the two locations is that Kalgoorlie was the more prolific producer in the early days, and has enjoyed the benefits of tenement consolidation in the modern era, an event due largely to that English migrant who calls himself an Australian, Alan Bond.

While Bond was busy creating what is now known as the Fimiston mine, or the Superpit, run by Newmont and Barrick under the Kalgoorlie Consolidated Gold Mines joint venture, Coolgardie limped along as the poor relation with a smattering of fair-to-average pits dotted through the scrubby semi-desert country, with none of them causing much excitement.

Hobbs’ plan, which falls into the ambitious category on the Sir Humphrey Appleby scale of difficulty, is to consolidate the tenements Austminex currently holds, mainly to the south-west of Coolgardie, with a similar sized swag of ground known as the Coolgardie Gold Project (CGP), to the north and east. This new package, which includes an operating processing plant known as Three Mile Hill (no points for imaginative names in that part of the world), is being acquired for A$4.7 million from Herald Resources and Leviathan Resources, the gold spin-off from MPI Mines.

If she completes the deal, and all she has so far is an option plus four months to complete, Hobbs will be entitled to the tag of Coolgardie Consolidator. Key steps to that prize are the requisite fund raising to pay Herald and Leviathan with possibilities including a joint venture with an unnamed North American goldminer, and/or a listing on AIM, with talks already underway with a pair of Nomads who have expressed interest in taking the deal to London.

Once in a single pair of corporate hands, Coolgardie has the potential to look a lot different than it does today. The combined resource of what Austminex currently has at its Dreadnought and Mount prospects, plus the material on CGPs ground, amounts to 1.4 million ounces, though only 29,000oz falls into the reserve category. More importantly, the Three Mile Hill plant is in need of a shutdown, tender loving care, and then re-opening on a 5 year full-production schedule rather than the half-empty status which has made it a high cost producer in recent years.

The target is to elevate Austminex from a Coolgardie hopeful into a business producing in excess of 100,000oz a year at a per ounce cost substantially below the current Australian gold price of around A$538/oz, with exact costings yet to be worked out. That production target, Hobbs says, is not pie-in-the-sky, it is what might be reasonably expected from the known resource, as it is converted to reserves. After that comes the blue sky of exploration on around 200 square kilometres of tenements with a well established gold production history.

It is the combination of the tenement package with the existing plant that needs additional feed, and the exploration potential which gives Austminex its best look since its late 2000 float, and somewhat drab performance ever since, a performance which has restricted the stock to its current market capitalisation of just A$18 million. Once it becomes better known as the company run by Kate The Coolgardie Consolidator there could be room for a significant re-rating.
 
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