This very exciting article, detailing Goldstar (GDR) which I...

This very exciting article, detailing Goldstar (GDR) which I have been in since 13c, was brought to my attention by utb on share scene!

State's goldfields on comeback trail

By Barry Fitzgerald,
March 6, 2006
Page 1 of 2 | Single page
Companies looking to revive Victoria's old goldfields have long suffered in the valuation stakes compared with the rest of industry. But those days are gone; investors have taken the great leap of faith.
Look no further than the current market capitalisation of Bendigo Mining and Ballarat Goldfields.

Bendigo is now worth more than $880 million and Ballarat commands about $520 million. That is a cool $1.4 billion, which would buy you a lot of gold from the Bank of England vaults.

And among the Garimpeiro-sized stocks, Andrew King's Goldstar Resources has just about cracked $50 million on the strength of its Walhalla project.

There has been a leap of faith on two fronts.

Firstly, after the surge in the gold price to near 25-year highs, there is a broad faith that gold will remain strong.

Then there is (finally) faith that when Bendigo says it has good reason to believe there is at least 11 million ounces of gold to be mined below the city, it knows what it is talking about. The same goes for Ballarat with its 8.3 million ounces and Goldstar with its 3.5 million ounces.

That acceptance has been a long time coming — more than 25 years if you use 1980 as the starting point for Australia's "third" production boom.

The slow acceptance was due to the "nuggety" nature of the old goldfields making it near impossible to arrive at a "reserve" statement, one that makes investors and bankers feel warm inside before mining actually starts.

The new Bendigo and Ballarat projects (Bendigo fires up in mid-year and Ballarat is cranking up now) were driven by geological "models" based on historic data and modern drilling and sampling. The same goes for Goldstar at Walhalla.

In the case of Bendigo, it has gained sufficient comfort in its model to rate its 11 million ounces as an "inferred resource".

It has done so knowing that the tonnage and grade of an inferred resource can only be estimated with a low level of confidence.

But having said that, the resource must also have reasonable prospects for eventual economic extraction. What's more, geological and grade continuity can be assumed.

Ballarat has stayed for the time being at the geological model estimate level for the bulk of its resource, as has Goldstar.

But, as the surge in market valuations for all three companies suggests, the 25 years of arguing about whether or not the old goldfields can make a comeback without having any "'reserves" has been well and truly won.


Companies looking to revive Victoria's old goldfields have long suffered in the valuation stakes compared with the rest of industry. But those days are gone; investors have taken the great leap of faith.

Look no further than the current market capitalisation of Bendigo Mining and Ballarat Goldfields.

Bendigo is now worth more than $880 million and Ballarat commands about $520 million. That is a cool $1.4 billion, which would buy you a lot of gold from the Bank of England vaults.

And among the Garimpeiro-sized stocks, Andrew King's Goldstar Resources has just about cracked $50 million on the strength of its Walhalla project.

There has been a leap of faith on two fronts.

Firstly, after the surge in the gold price to near 25-year highs, there is a broad faith that gold will remain strong.

Then there is (finally) faith that when Bendigo says it has good reason to believe there is at least 11 million ounces of gold to be mined below the city, it knows what it is talking about. The same goes for Ballarat with its 8.3 million ounces and Goldstar with its 3.5 million ounces.

That acceptance has been a long time coming — more than 25 years if you use 1980 as the starting point for Australia's "third" production boom.

The slow acceptance was due to the "nuggety" nature of the old goldfields making it near impossible to arrive at a "reserve" statement, one that makes investors and bankers feel warm inside before mining actually starts.

The new Bendigo and Ballarat projects (Bendigo fires up in mid-year and Ballarat is cranking up now) were driven by geological "models" based on historic data and modern drilling and sampling. The same goes for Goldstar at Walhalla.

In the case of Bendigo, it has gained sufficient comfort in its model to rate its 11 million ounces as an "inferred resource".

It has done so knowing that the tonnage and grade of an inferred resource can only be estimated with a low level of confidence.

But having said that, the resource must also have reasonable prospects for eventual economic extraction. What's more, geological and grade continuity can be assumed.

Ballarat has stayed for the time being at the geological model estimate level for the bulk of its resource, as has Goldstar.

But, as the surge in market valuations for all three companies suggests, the 25 years of arguing about whether or not the old goldfields can make a comeback without having any "'reserves" has been well and truly won.

AS INTIMATED earlier, Goldstar's Walhalla project is increasingly being seen as a Bendigo or Ballarat-type story. If Bendigo and Ballarat can command $1.4 billion for their combined 19.3 million ounces, what is Walhalla, with 3.5 million ounces-plus, worth?

Needless to say, it is a big number. One that it would be totally irresponsible not to give any credence to.

Having said that, there is no doubting that Goldstar has become the subject of some serious buying in recent times.

Sydney-based Thai gold producer Kingsgate has secured a 19.7 per cent stake. More recently it has been joined on the share register by New Zealand investor John McIntyre (11.7 per cent) and investment group Zurich Trust (12.1 per cent), with the latter said to involve London-

based merchant banker Rick Haller. You can put directors down for about 12 per cent, Colonial for 3.5 per cent, and Perth-based boutique fund Entrust Investment for about 4 per cent. Zurich is the most recent entrant, taking up its shares in a $5.1 million placement at 40¢ a share. Kingsgate's nose was kept in place by it getting a second tranche placement at the same price to maintain its holding at 19.7 per cent.

Goldstar closed Friday 1¢ higher at 47.5¢. When viewed with the value gains at Bendigo and Ballarat in mind, the movements on to the share register suggest some interesting times ahead.

In the meantime, Goldstar has just added to the Walhalla story by picking up an adjacent exploration tenement. So expect growth in the group's geological resource estimate before long.