New Holland Banks On Ski-country Gold Play For Useful Return

The Age

Thursday April 11, 1996

Barry FitzGerald

THE Victorian gold battler New Holland Mining NL is hoping big things come from its gold exploration play at its rugged Mount Useful slate-belt tenements in Victoria's ski country.

Although only 150 kilometres from Melbourne and within cooee of Mount Buller, it takes a good six hours to make the trip to the tenements New Holland is banking on to take over where its Heathcote gold mine left off.

The Heathcote mine was a good little bill-payer for New Holland - and the depressed rural economy it helped to perk up - but it was only ever going to provide a leg up to something bigger and better.

Whether or not the Mount Useful tenements become that something bigger is being put to the test in a 2000-metre drilling program and broader-based exploration program costing $400,000.

It's designed to elevate some of the early promise of the prospects into something more tangible.

If the results stack up, the plan is to bring the owner of the tenements, Mount Wellington Gold, to the market in a $2 million-$4 million float that would provide the funds to chase down the region's production potential.

New Holland owns 40 per cent of Mount Wellington, with the rest held by a grouping of Melbourne solicitors, geologists and others.

Funding for the latest exploration program is coming from the loverboys of the Victorian gold industry, Greenchip Resources.

That buys Greenchip Resources 12 per cent of Mount Wellington, with New Holland planning to maintain its 40 per cent interest ahead of the planned float by acquiring more shares.

IT WAS the early morning start that compelled Garimpeiro and his burro to pass up today's invite from Sedimentary Holdings NL to join 40 market types for a tour of its Victorian gold operations.

After downing some coffee and croissants with Sedimentary's Rob Devereux in Sedimentary's Dudley Street office in West Melbourne, the tour party will be heading off to the Amphitheatre alluvial operation near Avoca.

It's a handy operation, producing some 3600 ounces of gold a year. Avoca gold output is in the process of being ramped up to 7000 ounces a year with the development of the Mountain Hut alluvial operation, all of three kilometres to the west of Amphitheatre.

Mountain Hut will differ from Amphitheatre by going the in-pit processing route, with success at the new operation likely to see it adopted up the road.

The total cash costs for the Avoca operations at an estimated $380 an ounce are not the lowest you will find, but hedging at $560 an ounce could make the expanded operation a nice earner.

The Avoca operations continue to underpin what is just about Sedimentary's busiest period since its was floated in 1969 on the back of a uranium project in South Australia.

The bulk of the activity is in Queensland with the Miclere Basin and Cracow gold projects.

Miclere is where Sedimentary heads a $5.2 million research and development syndicate working on a continuous mining and treatment system, or what might otherwise be called a miner's dream machine.

Newcrest Mining has been active at Cracow, where it is earning a 70 per cent interest. Apart from anything else, Sedimentary owns a hard rock treatment plant capable of handling about 300,000 tonnes of ore a year when the supply is found.

Sedimentary's shareholders - including the board with 25 per cent and Willy McLucas with 19.8 per cent - look to be getting a lot for their buck (the share price is 18.5 cents).

It will be interesting to see, then, if the option-holders (the options are at 0.6 cents) rally to the cause at the end of the month and kick in $3.5 million from the full exercise of their positions at 20 cents a pop.

NORM Seckold's Valdora Minerals - the gold producer at Rustler's Roost in the Northern Territory and the gold producer hopeful at Ballarat - is close to disappearing from the lists as its takeover by Canada's William Resources comes to a successful conclusion.

Valdora will live on in the local market thanks to the planned listing in Australia of William, which will have a shareholder base split pretty much equally between its shareholders and those ex-Valdora.

The swap of 28 William shares for every 100 Valdora shares ends its days valuing Valdora at about 45 cents a share after accounting for the exchange rate - a handy premium to yesterday's close for the stock of 39 cents.

The Valdora share price has never recovered from the beating it took when Rustler's Roost was having problems which, in turn, restricted Valdora's ability to push ahead with its fully permitted Ballarat East project.

The Canadian market is likely to be more forgiving, rating the assets contributed by Valdora more for their potential than for what disappointment there might have been in the past.

The Canadian market is also more forthcoming when it comes to pumping in equity funds in support of gold plays, whether they be in west Africa or on the edge of Ballarat.

That could well force a rethink on the Valdora assets - now part of an enlarged William - by the local market.

As it is, Rustler's Roost has been running well. Cash costs are still high at the mid to high $400s an ounce level, but having William on board is allowing a more aggressive look at developing a 100,000-ounce-a-year operation based on the sulphide resource.

At Ballarat, the expenditure of about $11 million is expected to see the first gold pour late this year.

At the planned initial treatment rate of one million tonnes a year, gold production would be about 30,000 ounces a year.

Production could climb at modest cost as the initial outlay includes the up-front investment in the tailings dam required for the first two years of the operation.

With its own production interests included, William could rank as a 170,000-ounce producer by 1988.

© 1996 The Age

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