OceanaGold eyeing underground goldmine June 29, 2010
Massive Gold Formation A Little Known Mining Company Has Discovered Something Big. New Rpt.
WealthDaily.com/New_Gold_Report
OceanaGold is looking at moving from opencast to underground mining at Reefton, on the West Coast, and at expanding its current opencast pit.
An underground mine could involve digging below the opencast pit at Oceana's Globe Progress mine, vice-president, corporate and investor relations Darren Klinck said on Tuesday.
Oceana had increased its Reefton exploration budget from $US2.8 million ($NZ3.8 million) for 2010 to $US7.2m for 2010/2011, Mr Klinck said.
"We think that it makes sense to invest additional capital in the exploration programme and that's one of the areas, looking for the possibility of underground extensions."
Oceana had carried out similar work in Otago where it had commissioned the Fraser's underground mine in 2008 on the site of its existing opencast pit.
"The geology is different in Reefton, but the same sort of idea."
Digging the existing Reefton pit deeper was another option.
"Ultimately it comes down to the geology and what sort of gold bearing mineralisation is in place.
"It's still early, I don't want to speculate one way or the other," Mr Klinck said.
"But the fact we're investing this additional $US4.4m over 2010/2011 at Reefton demonstrates the amount of prospectivity we see in that area."
Fraser mine employs about 100 people. Whether a Reefton underground mine could employ a similar number would depend on the size of the resource and of the mine, Mr Klinck said.
However, any new development would mean more staff. Oceana currently employs 190 at Reefton, including full-time contractors.
Based on current reserves, the Globe Progress mine is due to continue until 2013/14.
But the potential for expansion was good, Mr Klinck said. The results of drilling to date had been promising, backed up by strong gold prices.
The expanded exploration programme would include more drilling and technical/economic assessments for a potential underground mine.
"If you look back to 2009, there was virtually no one in exploration. It's been built up to 13 and it's now going to go to 18 ...
"We think the prospect of extending the opencast mine, along with any potential underground operations, is quite good."
Oceana would also conduct an independent review of its Sam's Creek exploration project, near Takaka, to examine the best way to progress the deposit which contained an inferred resource of 770,000 ounces of gold.
The Reefton goldfield is one of the most prolific goldfields in New Zealand. In the past it produced more than two million ounces of gold from hard rock mining and an additional eight million ounces from alluvial mining, making it one of the more significant goldfields in Australasia.
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OGC Price at posting:
$3.40 Sentiment: Buy Disclosure: Held
