Consolidation must happen: 3/8/09APEX Minerals managing director...

Consolidation must happen: 3/8/09

APEX Minerals managing director Mark Ashley said today that consolidation of the Australian gold sector was inevitable and Apex would play a key role in it. “What we’re seeing with Avoca and so on is the start,” Ashley told delegates on the first day of the 2009 Diggers & Dealers forum in Kalgoorlie.

“Obviously there is operating synergies for consolidation but there are other synergies for further consolidation in the Australian gold sector.” Baker Steel Capital Managers took a 6% stake in Apex in June and has since increased its interest to 8.74%, making it Apex’s
third-largest shareholder. “I don’t want to speak for them but their views on the consolidation of the Australian gold industry are very similar to ours and I think it has to happen,” Ashley said.

Baker Steel also has a 12.6% stake in Dioro Exploration, which is potentially enough to block Avoca or Ramelius Resources’ bids for the company. Ashley said that quality, rather than ego, would determine which assets were acquired or disposed of in the future.

Meanwhile, later this month the company will seek shareholder to spin-off its nickel assets into Croesus Mining. Prospector and Apex shareholder Mark Creasy will also merge his nickel assets into the new company, to be renamed Sirius Resources. Apex will manage Sirius and retain 27% while Creasy will hold a 29% stake.
Ashley said the move would allow Apex to continue to focus on expanding production at Wiluna and said the company believed it had only just scratched the surface at the project. “We’ve seen substantially greater potential at Wiluna than we originally thought,” he said.

Ashley said significant infill drilling was planned for Wiluna to upgrade inferred resources and build on reserves with the ultimate aim of extending the mine. He added that if production could be expanded to 150,000 ounces per annum, cash costs were expected to drop to around $A650 per ounce. Wiluna is currently ramping up to 120,000ozpa at targeted cash costs of $750/oz.