Kent Plans Aussie/NZ Spinoff

Kent Exploration (KEX-V, KXPLF-O) has assets across North America in Nevada, Washington state, British Columbia and Saskatchewan, but this year its focus is on Australia and New Zealand. The junior now plans to hive off its assets in the Southern Hemisphere into a separate company.

“There will be Kent and then we will have Australia and New Zealand under a new umbrella company held by shareholders in Kent,”Graeme O’Neill, Kent’s president, explained in an interview.

O’Neill notes that other companies are starting to look at New Zealand. “The country has had a change in thinking about how to do business,” he says. “They’ve essentially said if you come down here, we will help you so that you can run your business properly.”

Currency advantages add to the allure. In New Zealand, there is a 25% discount on the Canadian dollar and in Australia it’s a 5-10% discount. “Those are significant advantages,” O’Neill says.

Kent’s foray into New Zealand and Australia coincided with the global financial crisis as many mining companies started offloading assets.

“Back in October and November when the world was crashing around our ears, we looked at things and decided that there was an opportunity to get very, very good people and very, very good projects, mainly because they would come free as companies downsized,” O’Neill says. “So we got very good projects at a very inexpensive price.”

In February, the Vancouver-based junior entered into an option agreement with CanAlaska Uranium (CVV-V, CVVUF-O) to earn a 70% interest in the 140-sq.-km Reefton gold project in the historic Reefton Gold Field — one of New Zealand’s three main gold districts.

Historic reports indicate that since gold was first discovered in the district in the late 1800s, about 10 million oz. of placer gold and 2 million oz. of lode gold have been recovered from the Reefton gold camps. OceanaGold (OGC-A) operates a mine there, on the northern edge of the Reefton project, that produces about 50,000 oz. gold a year.

Now Kent Exploration has acquired the prospecting permit for the Alexander River gold project, about 25 km southeast of Reefton on the west coast of New Zealand’s south island. The 26.7- sq.-km prospect lies in the southern portion of the prolific Reefton Gold Field.

The Alexander River prospect was home to the historic Alexander gold mine that reportedly produced 41,090 oz. gold from 47,730 tonnes of quartz. It was shut down in 1943 due to labour shortages. OceanaGold’s precursor company, Macraes Mining, rehabilitated the Alexander mine’s Level- 6 adit, mapped and sampled the underground workings, and drilled seven underground holes between 1993 and 1996. Of those holes, one reportedly intersected a 9-metre zone of 3.85 grams gold per tonne, which included 5.4 metres of 5.3 grams gold; another intersected 1.9 metres of 9.8 grams gold.

Macraes reported that an auriferous halo of sulphide-hosted mineralization existed around the early mined reefs, and that there was an inferred resource of roughly 4 million tonnes grading more than 5 grams gold per tonne or 643,000 oz. gold, in a shallowly dipping structure from surface to the Level-6 workings.

Kent plans to conduct a geological mapping and sampling program at the Alexander River mine later this year to see if it can identify targets for its 2010 drill program.

About 20 km north of the Alexander River prospect, OceanaGold is mining its Reefton operation, which produced about 640,000 oz. gold from underground workings before it was converted into an open-pit mine with current reserves of 350,000 oz. in a total estimated resource of 1 million oz. gold.

Reefton started production in 2007 and recently OceanaGold applied to extend the boundaries of the mine’s permitted area. The western boundary of the extension is close to the northeastern boundary of Kent’s Reefton gold project.

In Australia, Kent has entered into an agreement to earn 100% of Teck Australia’s interest in Chalice Gold Mines’ Gnaweeda gold project in Western Australia. Teck has already earned a 51% interest in Gnaweeda, and once it reaches 70%, Chalice can either form a joint venture with Teck, or convert its interest in the property to a 0.5% net smelter return royalty, leaving Teck with 100% of Gnaweeda.

“Teck — which was also in significant trouble with the takeover of Fording (Canadian Coal Trust last year) — started to offload assets and they looked at our beefed-up technical team and thought there was a fit there,” O’Neill says.

The Gnaweeda project consists of more than 190 sq. km covering part of the Gnaweeda greenstone belt in the Murchison region, 30 km east of Meekatharra in Western Australia.

Historical exploration defined a significant gold and arsenic anomalous zone, over 15 km long and up to 750 metres wide, within a package of mafic and felsic rocks.

At presstime, Kent Exploration was trading at 10.5¢ per share in a 52-week trading range of 3-17¢. The junior has 24.8 million shares outstanding.