could unity be sniffing?

Hmmmm this is interesting.

http://www.theage.com.au/business/unity-mining-joins-the-junior-gold-rush-to-buy-20120627-212tn.html



Unity Mining joins the junior gold rush to buy



Peter Ker
June 28, 2012

Exploration has added years to the expected life of the Henty mine.

THE small end of the gold sector has lately been bucking the sluggish trend in mergers and acquisitions, and that activity is set to continue if Andrew McIlwain gets his way.

The Unity Mining chief has $48 million burning a hole in his pocket, and he wants to spend it before Christmas in a push to turn Unity into a mid-tier gold producer.

Unity already produces 50,000 ounces of gold each year from its Henty mine on Tasmania's west coast. Mr McIlwain reckons the company can double that with a judicious acquisition in the months ahead.

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The Henty mine creates enough profit to pay for itself plus a $10 million exploration program in the surrounding areas, meaning the $48 million on Unity's balance sheet is ''quarantined'' for acquisitions and other growth opportunities.

''We would like to pick up a project that is at an advanced exploration or early development phase, whether that means buying a property itself or acquiring through a merger with another company,'' he said.

Mr McIlwain said discussions had taken place with gold plays in Western Australia and on Australia's east coast, and a swoop for one of them was not far away.

''We will be considered about what we do, but we are clear that we will do something this year,'' he said.

Mr McIlwain ruled out buying anything in Victoria, despite the company's traditional base and a chunk of its shareholders living around Bendigo.

''I wouldn't entertain it; Unity in its previous guise has spent probably in the order of $400 million in Bendigo for very little substantial outcome,'' he said. ''Corporately it would be a backward step to go back into Victoria. We've had some opportunities put in front of us but I think we have to stretch our legs and go somewhere further afield.''

Consolidation has swept across the junior end of the gold sector in recent months, with Singaporean group LionGold among the most notable players. LionGold has sought to buy small gold assets from at least four Australian companies and even more overseas in its push to create a globally diversified, Asian-based gold company.

Unity is celebrating the third anniversary of its Henty acquisition, which effectively kept the mine in business. The mine was previously owned by the world's biggest gold producer, Canada's Barrick Gold Corporation.

With bigger assets to focus on, Barrick planned to close Henty, but was persuaded by Tasmanian authorities to sell it to a company that would keep it operating.

The mine has produced close to 150,000 ounces of gold since the sale, and further exploration means its lifespan is virtually guaranteed for at least another five years.

Mr McIlwain said he was confident Henty could still be turning a profit for Unity in 10 years' time.

The reporter attended a site tour at Henty as a guest of Unity Mining.


Read more: http://www.theage.com.au/business/unity-mining-joins-the-junior-gold-rush-to-buy-20120627-212tn.html#ixzz1z5LvEC64