Gold price helps revive mining in the Victorian alpsBarry...

Gold price helps revive mining in the Victorian alps

Barry Fitzgerald
September 10, 2007

Page 1 of 2 | Single page
GARIMPEIRO


Goldstar Resources
GOLD stocks are going be hard to ignore in the weeks ahead thanks to the march in the price of gold to more than $US700 an ounce. With that 16-month high, and continuing doubts about the strength of the US dollar and economy, gold just might finally show up its base metal cousins in the price-performance stakes.

All that is good news for Andrew King at Goldstar, with its focus on reviving the Walhalla goldfield in east Gippsland.

Under current planning, Goldstar should be in production in late 2008 or early 2009 from the Eureka project.

If Goldstar gets it right, there is a better than average bet that the return of high-grade goldmining in Victoria's alpine region will be a permanent feature for decades.

With its control of the extensive lines-of-reef systems in the district, Goldstar has multiple development options to follow on from Eureka — which it describes as its "proof-of-concept" deposit.

Successful development of Eureka — a final investment decision is likely in the first quarter of calendar 2008 — would prove that the Walhalla style of deposits have what it takes to support a regional renaissance in goldmining.

Recent deep drilling at the Tubal Cain dyke bulge, five kilometres along the ridge from Eureka, means the former CRA property is lining up Goldstar's next development.

The drilling confirmed a geological model that points to the presence of 3.6 million tonnes of potentially mineable quartz reef/breccia material. No grade estimate is possible but if the potentially mineable 720,000-tonne estimate at Eureka lives up to its own grade expectations of eight to 12 grams of gold a tonne, things will start to get real interesting.

It won't be long before Eureka gets put to the test. Three groups are preparing bids for its modular processing facility, with Goldstar shooting for milling capacity of 150,000 to 200,000 tonnes a year.

At the expected grade range, that would give mid-point annual gold production from Eureka of about 55,000 ounces at an estimated cash operating cost of $120 to $145 a tonne of material processed. Not a bad start in anyone's language, given the fat cash margin that would be left over at current prices and with Tubal Cain and others to follow.