A write up in the Australian today. Good to see CGG getting some media exposure. . Citadel Resource Group (CGG) 28cFont Size: Decrease Increase Print Page: Print CRITERION: Tim Boreham | March 19, 2008
THE paradox of gold is that the higher the price, the more is dug up and the less of a rare metal it becomes. .
It's not consumed, either: barring a few ingots which went down on Spanish galleons - and, rumour has it, HMAS Sydney - most of the yellow stuff is still around Still, as long as the greenback is approaching parity with Monopoly money, gold will stay above the $US1000 ($1080) an ounce level breached last week.
What better time to mention the Saudi Arabian adventures of Citadel Resource Group, which yesterday reported "stunning" drilling results from its fully owned Shayban prospect, including a one-metre sample grading 606 grams a tonne?
More typical examples are 39 metres averaging 37.8 g/t and 14 individual one-metre samples of 25 g/t or more. Put in context, reserves at the massive Telfer operation in WA average 1 g/t.
Saudi Arabia is more known for its black gold. The oil-less Red Sea side of the country boasts a gold province, the Arabian Shield. Thanks to oil, the Government has had little interest in promoting mining but its attitude is fast changing. The motivation is not so much revenue, but to provide employment for the kingdom's idle youth.
The former listed media outfit ADV, Citadel has found itself in the right stretch of sand at the right time. It acquired the patch through last year's acquisition of mining services company Vertex and a subsequent deal saw Citadel buy out its 30 per cent local partner, CMC.
Citadel director Kris Knauer says the company knew of Shayban's potential, with work as far back as the 1960s delineating a 250,000oz resource. But the latest grades "came out of left field".
Citadel has now set a target of open-cut production within 18 months to two years, based on a $US40 million ($43 million) funding cost and annual output of 70,000-90,000oz.
Shayban has overshadowed work on Citadel's main game, its 50 per cent-owned Jabil Sayid copper-gold-silver-zinc project.
Jabil Sayid - conveniently located 350km from the commercial hub of Jeddah - last month upgraded its
JORC-compliant reserves to 74 million tonnes.
Falling base metal prices might have dampened enthusiasm for the project but it's still a monster deposit in a favourable location.
Knauer says both projects will enjoy an amply available workforce - the absence of income tax attracts foreigners - while 30c-a-litre fuel does wonders for the cost line.
Citadel shares gained 3.5c, or 14 per cent, on yesterday's news and are well up on their early February trough of 20c. Citadel's $105 million market cap is justifiable, given the potential of its two ventures.
We rate Citadel a speculative buy, but expect the stock to take a breather in between more news of "bonanza" (Citadel's words) grades.
CGG Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
