Barry FitzGeraldJuly 30, 2007Page 1 of 2Goldstar...

Barry FitzGerald
July 30, 2007

Page 1 of 2

Goldstar Resources

VICTORIA'S gold contingent can expect a frosty reception when it rocks up to the annual Diggers & Dealers bash in Kalgoorlie next Monday.

Bendigo, Ballarat and, more recently, Perseverance's Fosterville project, have all failed to live up to what had been promoted with gusto at previous D & D events.

The boys from Vic used to chuckle that while the boys in the West continued to struggle to lock in mine lives of more than five years, the Victorian mines would be chugging out gold in 20 years, if not 30 years' time.

But it's the boys in the West who are now laughing.

Bendigo has reverted to one of the world's most expensive exploration projects and there is going to be a rethink on the mine plan at Fosterville. Fortunately, good corporate citizen Lihir has come to the rescue of the Ballarat project and is spending no less than $100 million on returning it to "commercial" production from next year.

So sentiment towards the Victorian gold sector is about as low as it can get. But there is some light at the end of the tunnel, and it comes from the far east of the state at the old Walhalla goldfield.

Word is that the owner of the project, Goldstar Resources, is finally in a position to reveal its "big picture" story, possibly at D & D between drinks, if not before. Unlike operators of other Victorian projects, Goldstar managing director Andrew King has been careful not to crow too much about the revival of the old goldfield until all the results are in.

The results everyone has been waiting on are from the bulk sampling of the Eureka dyke bulge. While it sounds like something you might find in the back room of a Kalgoorlie bar, it's actually the first of many mineralised structures in the Walhalla mining camp that Goldstar hopes will underpin first production in 2008.

Goldstar is not releasing the bulk sample results to the market until they have been "carefully assessed and collated by the pre-feasibility team". Given what's gone on before in Victorian gold, that makes complete sense to everyone.

Assuming the soon to be released results stack up, that would trigger work on the more detailed Eureka mining feasibility study, due to be completed by the end of the December 2007 quarter.

Having said all that, what is known ahead of Goldstar's big picture release is that its geological model for Eureka and other dyke bulges is holding true, with average grades of more than 9 grams of gold a tonne (plus peak values of 170 g/tonne or 5.4 ounces) over reasonable widths indicated to date.

More recently, there was the news that an increase in the estimated size of the Walhalla Proprietary dyke bulge means that its northern margin could be within 200 metres of Eureka, raising the possibility that it could be developed by extending development work at Eureka.

Perhaps because of the disappointments elsewhere in Victoria, Goldstar's share price has not been travelling well this year.

It started out at 67¢ and on Friday closed at 41¢. But with the big picture about to be unveiled and the gold price remaining nice and strong, you've got to wonder if it could finish off the year with a flourish.


http://www.theage.com.au/news/business/miners-from-west-may-have-last-laugh-on-vics/2007/07/29/1185647739860.html