As far as I know, there are similar gold deposits up and down the Great Dividing Range. The country rock can be a bit different, but basically there are a bunch of vein deposits where the quartz veins of gold are like large sheets, varying from 20cm up to several metres thick. Not only does the vein width wax and wane, but the grade of gold in the veins waxes and wanes. Nuggetty. All the deposits show grades that go down to 2g/t for parts, and hundreds of grams per tonnes in patches. All of them show historical grades of over 20g/t (eg GDR is 27g/t, CTO is 34g/t). All the deposits are expensive to prove to JORC standard because hey are nuggetty and go deep, and the companies so far have barely manage to prove them to inferred resource standard for small portions of their deposits.
The deposits I am talking abut are owned by (north to south): CTO, HEG, BDG, LGL (Ballarat), GDR, MCO, PSV, MYG. Dislcosure: I hold shares in all of them, except PSV (too expensive per ounce, plus that damned hedging) and LHG (I prefer Australian assets). There is a similar deposit at Gympie, but I don't know who owns it. All have historic mining that was abandoned in the inflation of WW1.
Bendigo had a lot of historic mining, some of it recent (up to the 1950's), but all the other deposits haven't seen modern equipment or methods. I'm not sure BDG have a lot of high grade stuff left, but all the rest do. BDG have problems with old shafts with water with a pH of 5 in it (must be treated before discharge), but nothing that cannot be overcome. I haven't been impressed with BDG's mining approach so far, having spent a lot of money with little result, but that might improve if they adopt methods like CTO or HEG or PSV.
About 60% of the world's historic gold production has come from deep narrow veins, e.g. all the South African gold. In Australia however, the vast bulk of production from the last few decades has been from open pit or bulk underground operations. Australian goldies are not used to considering narrow vein underground mining. Once it is proved to be economical, they will warm to it.
All the companies above will profit mightily from a large rise in the price of gold, because they own vast amounts of in situ gold and it's cheap. An investor's leverage to a gold price rise is much higher in these stocks than in most Australian gold stocks. The figures are staggering. CTO has a published potential of 50Moz and an inferred resource of 10Moz, BDG has a resource of 11Moz but probably only 15Moz potential, GDR has a 3.5Moz potential, MCO has a 4Moz potential, MYG has a 2.5Moz potential, HEG has a 4Moz potential, PSV has 3.8Moz potential, Ballarat probably has 8Moz or more. These deposits are open to depth, and only CTO has taken that into account in their potential figures. All except PSV ($150/mineable ounce) are going for around $20/mineable ounce.
The Aust gold community basically dismisses these deposits as high cost and therefore not worth buying into. If they noticed the success and costs of gold miners overseas, they would observe that mining costs of around $400/oz in these sorts of deposits is quite achievable, and that with good grades and high volume $300/ounce is possible. Very juicy. Unlike most Aust deposits they are relatively slow to mine, so they will be long-lived mines (20+ years, not the usual 5 - 7 years). So once one or two these miners show they can do it, the 100Moz of gold in these deposits will come into play in an investment sense.
The way to mine these deposits economically is really different from most Australian deposits, particularly in WA. There is little point proving up reserves then going to the bank for a loan, because it doesn't cost a lot more to mine the gold than to prove it to reserve standard (especially from the surface). So they will never have large reserves, and will always struggle to get bank loans.
Anyway that's enough prattling on. BTW, I am soon going to be selling a comprehensive spreadsheet on Australian gold companies at goldnerds.com. And I am still looking for a couple of knowledgable gold investors to help.
GDR
goldstar resources nl
