re: > nice write up by treadgold Nice write up by tim treadgold...

re: > nice write up by treadgold Nice write up by tim treadgold

understand he listed tam in his top ten picks for the year in the bulleitn I think someone said


Rising bullion price triggers outback gold rush

Tuesday February 7, 2006, 4:24 pm



By Tim Treadgold

PERTH, Feb 7 (Reuters) - Rising bullion prices are triggering the development of smaller gold mines in the Australian outback, with local prospectors comparing the mood to the 1980s when gold cost as much as $850 an ounce.

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"There are a lot of companies dusting off their plans after a decade of low prices," said Peter Woodman, chief executive of Wedgetail Exploration N.L. (ASX: WTE.ax) , which aims to spend A$30 million ($22 million) on a new mine yielding 70,000 ounces.

With prices at about $569 an ounce XAU=, it could be argued that 2006 is yet to mirror the early 1980s, but that is doing little to deter the growing legion of prospectors pegging claims in hopes of finding the next mother lode.

"You could say that history is repeating itself," said Denis Waddell, chief executive of Tanami Gold N.L. (ASX: TAM.ax) which plans to start construction by the end of the month on its Coyote mine in central Australia after 11 years of searching.

"The price is close to an all-time high in Australian dollar terms, which means we will be able to earn a pretty handsome profit at Coyote," Waddell said.

Small by the standards of gold industry leaders, Coyote should yield a maximum 60,000 ounces of gold a year at a cash cost of around A$350 an ounce, less than half the current Australian gold price of A$757 an ounce, based on current exchange rates.

Tanami expects to spend about A$8 million to develop the lode, using a second-hand processing mill bought three years ago when asset values were rock bottom and gold sold for only about $350 an ounce.

Tanami's stock has benefitted from gold's surge, nearly tripling to 21 Australian cents from 8 cents in mid-2005.

The share price of fellow outback panner Crescent Gold Ltd. (ASX: CRE.ax) has risen to 21 cents from 12 cents last July as it comes closer to developing small open pit mines in central western Australia at a cost of A$24 million.

"We're charging headlong into production," said Crescent Chief Executive, Andrew Haythorpe."The plan is to start at around 60,000 ounces a year, and grow to 90,000 ounces."

Haythorpe said it should cost around A$313 to produce each ounce of gold.

Like Tanami, Crescent's mines will have a relatively short life of between three and five years, although Haythorpe hopes to to discover more ore to keep them operating longer.

In both cases, the deposits were once owned by the big South African mining house AngloGold Ashanti ANGJ.J, which deemed the lodes too small and sold them.

Another prospect moving closer to development is Wedgetail's Nullagine mine in northwestern Australia .

Woodman said Nullagine would be constructed as a series of open pit mines delivering ore to a central processing mill. He said the forecast capital cost was A$30 million with the mine producing around 70,000 ounces a year.

Wedgetail's share price has been steady at around A$0.04 cents for the past year.

But a resurrection of Australia's small gold mining sector may not be wholesale.

John Jones, chairman of Troy Resources N.L. (ASX: TRY.ax) , said profit margins on gold mining may be improving but there was not much to mine.

"The (gold) reserve situation is not good," Jones said. "That's a result of a lack of exploration through the '90s when prices were lower." ($1=A$1.35)






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