swangold on the road, page-7

Kiernan's Davyhurst plans come unstuck
PETER KLINGER, The West Australian June 16, 2010, 7:22 am


Michael Kiernan

WA News / Sandra Jackson

Michael Kiernan's plans to resume gold mining at the old Davyhurst operation near Kalgoorlie-Boulder have come unstuck after a key investor pulled out because of the Rudd Government's proposed resource super profits tax.

Mr Kiernan's main vehicle, Stirling Resources, yesterday placed its shares in a trading halt pending "a corporate restructure" of its investments, which include a 37 per cent stake in the as-yet unlisted Swan Gold Mining.

Swan was eyeing a resumption of production at its flagship asset, rebadged Carnegie, and the Mt Ida underground project next month and a first gold pour in August. The proposed 60,000 ounce-a-year production profile was targeting cash costs of about $700/oz.

However, the resumption of work remained contingent on Stirling securing a $10 million cash injection from a strategic investor. It is understood Mr Kiernan had an investor lined up, only for the investor to pull out on Monday citing the tax regime uncertainty for its decision to hold off on providing the Swan cash.

A lack of immediate funding is likely to reduce Swan's work focus to minor exploration, despite strong gold prices of more than $1430/oz.

Swan is the reincarnation of Mr Kiernan's Monarch Mining, which collapsed two years ago. Stirling, which is controlled by 53 per cent shareholder Austrian commodities trader DCM DECOmetal, also owns 58 per cent of fledgling mineral sands producer Matilda Zircon and 26 per cent of junior Redbank Copper.

Mr Kiernan, who could not be reached for comment, controls 9 per cent of Stirling.