thor remains in the intensive care ward

April 28, 2010

Thor Mining Turns Its Hand To Gold Exploration In Western Australia.

By Our Man in Oz / www.minesite.com

A century ago Australians who fell on hard times knew exactly how to solve their money problems. They would roll up their swags, pack as much food and water as they could carry, and hitch a ride to the goldfields. What worked then can still work today, as Thor Mining is setting out to prove. Technically a British Plc, Thor also has an ASX listing and an Australian management team. And it's this Australia-based team which recognised the change of direction that was required when the price of the company's previously preferred commodities collapsed. In Thor's case it was the post-Lehmann Brothers wipe-out of the tungsten and molybdenum markets which forced the effective mothballing of the one-time flagship Molyhill project in the Northern Territory. In place of the two steel-hardening minerals Thor has set off gold exploring - and chosen a particularly interesting address.

Thor's freshly acquired Dundas project is located in the southern half of Western Australia, due east of the historic gold mining centre of Norseman, and on a geological trend which includes the five million ounce Tropicana project of AngloGold Ashanti and Independence Group. In terms of prospective ground this is some of the most interesting in what's already a gold-rich part of the world, not simply because of the Tropicana discovery, but also because it is significantly under-explored. That's because it was locked up in a conservation reserve for a decade from 1996 in spite of early evidence of gold in the region, discovered during a BHP Billiton soil sampling exercise in the 1980s.

Mick Billing, Thor's pragmatic chairman, knows he faces a tough job in re-focusing the company. "It's not that we really have a choice", he told Minesite's Man in Oz. "Molyhill isn't dead, but there's no point in pretending that we can make go of it when the prices of tungsten and molybdenum are at, or below, our break-even point. That's why we have to make the move into gold, while being prepared to go back to Molyhill when prices improve". The Dundas project, Mick says, has the potential give Thor shareholders "bang for their buck".

Covering around 340 square kilometres there are three tenements in the package of ground Thor is acquiring. Aside from BHP Billiton's soil sampling and limited shallow drilling, little work has been carried out on the tenements, which are lightly covered by wind-blown sand and scrub, with limited rock outcrops. To a casual visitor, and there certainly aren't many to this block of ground which stretches to within 25 kilometres of the transcontinental Eyre Highway, the Dundas tenements would look to be a very remote and challenging address - on the surface, at least. But it's what lies beneath the sand that has made the region a popular exploration destination for some of the world's gold majors, including AngloGold, Newmont, Teck Cominco, and Australia's own Mr Gold, Mark Creasy.

More than a decade ago Creasy told Minesite's Man in Oz that the stretch of geology known as the Albany-Fraser province would prove to be the host of world-class gold discoveries. His argument was based on a belief that under the sand and low scrub lay an area where major tectonic movement has occurred, creating a perfect environment for mineralising events, and especially for gold. Tropicana proved Creasy's theory. Now the hunt is on for more. Thor is the latest to toss its hat into the ring.

Luck will be needed, along with more money to pay for the exploration required. Mick explained that Thor has a single geologist on the ground and he has filed a number of encouraging reports. "He is one of the first people to walk the area since the conservation reserve was lifted", Mick said. "There is extensive surface cover, but he has also noted a number of rock outcrops. We're having an internal discussion now about whether we do some more soil sampling or bang down a few RAB holes to test the underlying geology".

There is very limited evidence of past drilling on the Dundas properties, though BHP Billiton did drill three holes in the most southern tenement, reporting a bottom-hole assay of 1.1 grams of gold a tonne. Modest as this sounds, it confirms the presence of gold in an area which is, in turn, surrounded by other exploration programs.

On the market, Thor remains in the intensive care ward. From a peak of A45 cents at this time three years ago the stock has sagged to around A1.5 cents, a level which values the company at less than A$2 million. That valuation only goes to underline the fact that Thor needs a capital injection to generate value from its new-found focus on gold. While this might concern some investors, it could also be an opportunity to take an early position in a company led by management with the hard-headed realism to stop beating their heads against the closed door of tungsten and molybdenum and do what comes easiest in Oz - find gold.