bulletin article

I don't hold RDR, but figured those who do will be interested, and delighted, to read this article from 'The Speculator' which will appear in the Bulletin mag when it hits the newsagents on Wednesday.
It tempting to put an order in early tomorrow morning, but like many, the scortching of the last two days tempers one's mood!

Mellow yellow
23/05/2006


Business Lead: Stock horror
Smart salary packaging
The Speculator: David Haselhurst
The Innovators: Favco


Rich veins near old bodies invigorate a young blood as gold prices continue to strike new highs. David Haselhurst reports.

In common with many other gold-linked stocks, Reed Resources (ASX code: RDR) has more than doubled its share price in the past three months as it moves towards first production in June from the reopening of an historic goldfield 100km north of Kalgoorlie. Last week the company delivered encouraging news to justify the strengthening of its share price. Reed announced a 75% increase in the gold resource at its Comet Vale project following an infill drilling program and a re-evaluation of extensions to the Sand Queen mining project. An independent resource estimate by Hellman and Schofield indicates an additional inferred resource of 128,000 tonnes grading 11.9 g/t for 49,400oz of gold (at a 5g/t cut-off). The new resource is additional to the existing resource in the adjoining Sand George project (167,000 tonnes of 12.1 g/t gold for 65,000oz).
So the combined resource has been increased to a total of 295,000 tonnes at 12 g/t for 114,000oz of gold (all at a 5g/t cut-off). While this doesn’t make it a giant among gold projects, there’s still a lot of potential in the properties that adjoin the Kalgoorlie-Menzies road. The mineralisation remains open at depth and to both the south and north. In addition, 20km of untested gold anomalous structures have been identified within the tenements.

Chairman David Reed, a veteran goldfields’ stockbroker and former chairman of Eyres Reed, has used his local contacts well. The project is being developed through a 50:50 joint venture with private company Kingrose Mining, a syndicate of experienced miners. Ore stockpiling began three months ago with Kingrose paying all the capital and mining costs to earn its 50%. Gold deeper than 240m will be split 60% to Kingrose and 40% to Reed to cover higher deep mining costs. Reed retains 100% of any potential open pit workings.


And Reed Resources has more going for it. The cash flow will help advance other targets. In April 2003, Reed picked up a bargain from Precious Metals Australia when it paid $260,000 in cash and shares for the Barrambie vanadium deposit, mid-way between Meekatharra and Sandstone. A pre-feasibility study in February envisaged a project to produce 20 million pounds of vanadium oxide a year for 12 years. Another project is a joint venture with Portman on Reed’s tenements at Mt Finnerty, 65km east of Portman’s Koolyanobbing iron ore mine and adjoining the standard gauge rail line linking Perth to the goldfields and south to Esperance from were Portman ships its ore.