Canadian miners lead gold push

BARRY FITZGERALD

Ads by Google

Hats off the Canadians. Photo: Rob Homer

CANADIAN goldminers have again shown a willingness to take on distressed Australian gold assets.

First there was the rescue by Vancouver-based Northgate Minerals of the Fosterville and Stawell gold mines in Victoria through the $282 million takeover of the struggling Perseverance Corp in 2007.

The two mines are now properly funded and Northgate continues to spend big on aggressive exploration programs.

Now it is the turn of mines in the Pine Creek mineral field in the Northern Territory, courtesy of Toronto-based Crocodile Gold, the company that last year paid $50 million for the NTgold assets of the collapsed Canadian-controlled GBS Gold.

Crocodile is planning to succeed where GBS failed, aided in part by a gold price that is 34 per cent higher than the June 2008 year average.

GBS owned and operated the Burnside and Tom's Gully projects and associated treatment plants. Starting out in September 2006 - the mines were owned by others - GBS stopped operations in September 2008 when administrators were appointed.

Canada is home to six of the world's 10-biggest gold producers, including Toronto-based Barrick Gold, which ranks No. 1 in market capitalisation. Barrick is a joint owner of Kalgoorlie's Super Pit mine.

Crocodile has found Canadian, US and European investors to be willing providers of cash for its plan to establish itself as one of Australia's biggest gold producers. This means Crocodile has no plan to list on the ASX. Northgate hasn't listed here either.

Crocodile has spelt out its production plans for 2010. Production of 120,000 ounces of gold at a competitive cash cost of $US650 an ounce is planned. It plans a big exploration effort with a budget of $US23 million.

Production will come from the planned treatment of 1.8 million of ore at an average grade of 2.3 grams of gold a tonne. Most of the production (75 per cent) will come from the Howley open-pit mine, with additional ore coming from the Brocks Creek and Tom's Gully underground mines.

Crocodile poured its first gold bar since taking control of the NT assets on December 29. The ore came from the Howley open-cut mine and the Brocks Creek underground mine and was processed at Union Reefs mill. At the Tom's Gully mine, development work is under way, with its higher-grade ore expected to be run through the group's Tom's Gully mill in the third (September) quarter.

Crocodile is forecasting capital expenditure for 2010 of $US56 million, including the last payment on the acquisition price.