IF YOU'D mentioned the word "Tropicana" to the Metal Detective a year ago, he would have recalled a drunken pilgrimage to the gambling Mecca of Las Vegas in the early 1990s. The Metal Detective by Stephen Bell.
He visited the Tropicana, one of those garish pubs in the heart of the main strip that the late gonzo journalist Hunter S. Thompson trashed three decades ago in Fear & Loathing in Las Vegas.
These days, however, Tropicana conjures up a less hallucinatory vision – that of AngloGold Ashanti's major new gold discovery, southeast of Laverton in Western Australia.
Laverton is a long way from Las Vegas.
But for some share market punters, it may just turn out to be an outback El Dorado.
The minority partner at Tropicana is Independence Group, a Perth-based nickel miner that has recently taken on a golden sheen for investors.
Independence owns 30% of the discovery, free-carried by AngloGold until the completion of feasibility studies, which are due next year.
In the meantime, the South African major is drilling the crrap out of the project to work out how much gold lies under the red dust.
It has been hailed as a multi-million ounce find, but it could take a while to establish whether talk of 3-5Moz is on the money.
Mineralisation has been defined over a 4km strike length and the system is open to the south.
Independence said recently that an initial resource estimate won't be ready until late next year "due to the size of the discovery and the amount of drilling required".
Asked last month why it would take so long, Independence chief Chris Bonwick said that it is a "very, very large" gold system. "The drilling to date has been very wide-spaced and 4km is a long strike length even just to walk it," he said.
Those comments did nothing to dampen speculation surrounding the find, which true believers hope will end Australia's near decade-long gold discovery drought.
Yesterday, Independence's shares closed up 10% at $4.39, valuing the group at just under $500 million. The shares have doubled in price since the middle of June.
Admittedly some of that gain is due to soaring nickel prices, which have boosted profits at Independence's Long mine at Kambalda. But MD suspects that most punters ploughing into the stock are gold bugs excited about the aroma of Tropicana.
Bonwick has every reason to feel chuffed about his company's golden run of luck.
AngloGold uncovered the Tropicana and Havana zones, and is now doing all the hard yards (or should that be kilometres?) on infill drilling.
But the project itself was generated by Independence and appeared in the company's 2002 prospectus. It was joint ventured to the gold major in January of that year.
As always, the jury is still out until a JORC-compliant resource is in the bag. But it seems clear that something big is brewing in the back-blocks of Laverton.
There is nothing like a good gold find to get tongues wagging. Some have suggested that Independence could even become a gold M&A target.
The discovery has also generated a bit of optimism in the local gold sector, which is slowly rebounding from a period of low prices, diminished exploration and hedging blow-ups.
Greg Wilkins, CEO of Barrick Gold, will no doubt be interested to hear the latest news on Tropicana when he wings into Perth tomorrow for an industry luncheon at the Convention Centre.
Following its recent $US10.6 billion takeover of Placer Dome, Barrick is the world's biggest gold producer by quite a stretch.
The Canadian group forecasts that it will produce between 8.6-8.9Moz in calendar 2006, putting it well ahead of rivals Newmont Mining of the US and AngloGold.
Second-placed Newmont seems to be dropping off the pace. Last week, it downgraded its forecasts to a range of 5.6-5.8Moz for 2006, compared with the previous 5.9-6.2Moz.
Barrick seems determined to widen the production gap even further.
It recently made cash offers for small North American groups (NovaGold Resources and Pioneer Metals), and is interested in Asia-Pacific companies holding "2 million ounce-plus" resources, the company told MD at Diggers and Dealers.
With $1.4 billion in its pocket and a sizeable borrowing capacity, Barrick has plenty of firepower.
Yet, because of foreign takeovers in the past decade, the major gold targets in Australia are few and far in between.
Newcrest Mining and Lihir Gold are both big enough to meet Barrick's size criteria, while smaller groups Resolute Mining and Oceana Gold might also be of interest.
Anything smaller would hardly satisfy the appetite of a beast as big as Barrick.
MD can't see it stooping to pick over the bones of Croesus Mining, for instance.
And taking out Independence wouldn't make sense because of its minority status at Tropicana.
But there is no doubt that Wilkins is keen to drum up further opportunities here. After all, the region will account for roughly one quarter of Barrick's 2006 production.
Tropicana – though firmly in the hands of one of Wilkins' competitors – is confirmation that there is plenty of life left in the apparently "mature" Australian gold sector.
IGO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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