After the goldrush - another Australian goldrush By Sid Astbury

dpa German Press Agency
Published: Tuesday November 28, 2006

By Sid Astbury, Coolgardie, Australia- Earlier this month, just a stone's throw from the spot near Coolgardie in Western Australia where prospectors Arthur Bayley and William Ford made their breakthrough discovery in 1892, a lone hunter with a metal detector unearthed a gold-encrusted rock worth enough for a couple of round-the-world plane tickets. That's the way it is with mining: 40 years on from diggers deciding that 500,000 ounces of gold was all they would get out the Coolgardie resource, there's another bunch of hopefuls keen for another try.

Focus Minerals Ltd, determined to bring an old resource back to life, is now the largest landholder in Coolgardie with a 210-square-kilometre holding.

A gold processing plant mothballed by the previous owner should be operating at full stretch in five years when Focus expects to be shipping 100,000 ounces of gold a year. The plant will start chewing through stockpiles of low-grade ore next year. This will provide the cash for new drillings and the hope is that the current 1.4-million-ounce resource-base will be greatly expanded.

"We've got expectations of some pretty large discoveries like the ones that have already been found," executive director Chuck McCormick said.

Focus has consolidated several relatively small holdings and is busy reconditioning the mill it bought for a bargain-basement price.

Focus is what's called a junior miner. It's independent of giants like BHP Billiton and Rio Tinto and raises money on the stock market as it goes along. It even shares its wealth with prospectors like the one who found the 10,000-Australian-dollar (7,500-US-dollar) nugget in November.

"We let prospectors go over the surface for a 10-per cent share of what they find," said managing director Peter Williams.

Juniors like Focus are banking on record gold prices and the latest technology to renovate old workings. The new gold from old mines is sold to finance fresh exploration.

Sometimes the juniors grow to be majors themselves. Other times their plan is to make themselves enticing enough to be snapped up by one of the majors.

Among those like Focus which are redeveloping old workings are the eight operations in Ballarat and the neighbouring goldfields town of Bendigo near Melbourne.

Ballarat Goldfields consolidated 13 mining leases and last year poured its first gold. Earlier this year it proved itself to be an exciting enough prospect to be taken over by behemoth Lihir Gold.

The juniors are in the vanguard of a push that could see Australia overtake South Africa and become the biggest gold producer by the end of the decade. Last year South Africa's output slipped 13 per cent to 263 tonnes while Australia's edged up by 3 tonnes to 296 tonnes.

In the goldrush of the 1890s there were 20,000 working the Coolgardie drift. But the town quickly lost out to Kalgoorlie, some 40 kilometres to the west.

Kalgoorlie is home to the world-famous open-cut Super Pit, Australia's most generous gold mine, with annual production of around 850,000 ounces. It's a whopper: 3.5 kilometres by 1.5 kilometres and 360 metres deep. The Super Pit took off in the 1980s when lots of little leases were consolidated into one and the economies of truly giant scale were brought into play.

Focus is underway with an initial capital raising of 5.8 million Australian dollars (4.4 million US) and now has a market capitalization of 23 million Australian dollars (17 million US).

Focus's Coolgardie operation is a tiddler compared with Boddington, 120 kilometres south of Perth, Western Australia's biggest gold mine refurbishment, with a planned outlay of 2 billion Australian dollars (1.5 billion US).

Boddington's owners, Newmont and AngloGold Ashanti, expect their milling plant to be sifting the gold dust out of an annual throughput of 35 million tons of rock within five years. Over the 17-year life of the Boddington mine, they are hoping for 850,000 ounces of gold a year - a match for the renowned Super Pit.

© 2006 dpa German Press Agency