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Republic Gold Aims to Start Bolivia Mine Next Year

May 14 (Bloomberg) -- Republic Gold Ltd., an Australian minerals explorer, plans to start a gold mine in Bolivia next year, Managing Director John Kelly said, denying a report that the company was abandoning the deposit.

Mareeba, Queensland-based Republic aims to start producing 100,000 ounces of gold annually at the $35 million Amayapampa mine in the fourth quarter of next year, Kelly said today in a telephone interview from La Paz.

“Gold prices are up and costs are coming down, so it’s a good time to be building a mine,” Kelly said. “We also have firm government backing for the project.”

Republic aims to complete financing and a feasibility study for the gold mine, which will be Bolivia’s largest, by September, he said. Earlier this month, the company also raised A$4.7 million ($3.6 million) through a share sale, Kelly said. The company is also exploring for gold in Australia.

A report today in La Razon, a La Paz newspaper, saying that the company had abandoned the deposit, is false, Kelly said. Company and government officials are holding talks and workshops with local communities in a bid to overcome fears about the project’s environmental consequences, he said.

Amayapampa, located in the Andes about 400 kilometers (240 miles) southeast of La Paz, holds reserves for 1.1 million ounces of gold, according to the company’s Web site. Drilling completed yesterday will expand those resources, Kelly said.

Generating Cash

“The idea is to generate cash flow and continue expanding our reserves,” Kelly said. “The resource potential is massive in this major mineral belt that runs through Bolivia into Peru.”

Republic slipped 0.3 cent, or 11 percent, to 2.4 Australian cents today in Australian Securities Exchange trading. The miner’s shares tumbled 74 percent in the past year.

Companies including Newmont Mining Corp., Golden Eagle International Inc., Orvana Minerals Corp. and Eaglecrest Explorations Ltd. are developing gold deposits in Bolivia, a producer of silver, zinc and tin.

Gold futures for June delivery rose $2.50, or 0.3 percent, to $928.40 an ounce on the New York Mercantile Exchange’s Comex division. That’s the highest close for a most-active contract since March 26 and put gold up 5 percent for the year.

You can check yourself at the following URL:

http://www.bloomberg.com/apps/news?pid=20601081&sid=aWHOEsYI5BbY&refer=australia

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