Report from Australia Gold at forefront of market boom

Most of the news emerging from the Australian mining industry has been sufficiently promising to keep an overheated stock market on the boil.

Gold issues have been at the forefront of speculative interest and in more than a few cases newly commissioned mines and emerging discoveries have put some considerable substance behind the boom. Also, the Australian gold mining industry has been successful in having the tax-free status of gold mining profits left unchanged by the politicians.

The Australian Mining Industry Council recently came up with some encouraging figures on the general state of the industry. Earnings from mineral exports in the financial year ending June 30 are expected to rise 12% to $14.5 billion(A), despite some commodities being affected by falling prices. New capial investment in resources is expected to rise 10% to $3.3 billion. Gold will do the best of the commodities with the value of exports doubling to $1.6 billion for the current term and expected to grow another 30% at least in 1988.

Some commodities like coal are having a very tough time, largely due to a fall in export prices received from Japan in recent times. However, one state government, New South Wales, recently announced it would cut the royalties demanded from black coal producers, particularly high cost underground mines, saving the industry an over-all $10 million in a full financial year. Announcing the move, the N.S.W. state premier said the royalty cuts would benefit the 12 mines in the state which currently employ 20,000 people.

Hydrothermal gold ore deposits in what is known as the “Pacific Rim of Fire” are providing a great deal of excitement for Australian company managements and gold share investors and speculators alike.

Some exceptional drill hole intersections have been reported and hydrothermal prospects in Australia’s near Pacific neighbors — Papua New Guinea, its nearby islands, Fiji and the Solomon Islands, are some of the prime target areas.

On the small Lihir Island off the Papua New Guinea coast, Kennecott Exploration in joint venture with an Australian company, Nuigini Mining, (now capitalized on the market at more than $600 million) outlined a near-surface sulphide mineralization zone in 1986. Drill- indicated ore reserves were recently estimated at 137 million tonnes with a grade of 2.66 g per tonne. However, that was before Kennecott reported on another 11 diamond drill holes which it said gave “spectacular and apparently consistent sulphide gold values over an area of 400 m by 200 m up to a depth of 270 m.

The drilling indicates that the target zone is open on all sides and at depth. Ten of the latest 11 holes yielded extensive intersections of more than 5 g per tonne. The best report was 88 m at 11.51 g and 130m at 7.21 g. Another significant single hole from surface to 222 m vertical depth averaged 5.35 g followed by a further 42 m at more than 4 g.

This deposit is already being viewed as a potential one-million- oz-per-year producer within two years.

The rapidly-mounting interest in epithermal gold deposits of the Pacific Rim has resulted in the Australasian Institute of Mining and Metallurgy holding a 4-day Pacrim Congress in Queensland from Aug 26-29.

The existence of epithermal gold is associated with the Australia Pacific boundary which extends irregularly south-eastwards through Papua New Guinaa, the Solomon Islands, Vanuatu, Fiji, Tonga and New Zealand.

Major gold deposits that have been discovered in this region extend from northwest to southeast — Ok Tedi, Porgera, Misima, and Panguna in Papua New Guinea, Gold Ridge in the Solomon Islands, Vatukoula in Fiji and Waihi in New Zealand.

Pacrim’s organizers say that such intense activity in the Pacific Rim in the past few years has led to a great need for geoscientists from all nations of the region to join together to discuss the economic, political and cultural implications of these discoveries.

Recent discoveries have the capacity to materially expand the economic wealth of third world countries in the region and have enormous social, economic and political impacts. It is important that the wealth is properly handled by the government of the country concerned as well as by the company that is making the discoveries.

The handling of wealth, property distribiution and the rights to ownership of gold developments will be discussed and debated at the congress.

The deputy prime minister of Papua New Guinea, Sir Julius Chan, will address delegates on resource politics of his country. Prof Charles Lipton, an international legal advisor in the U.S., will discuss the negotiation of mining agreements with Pacific countries. Solomon Mamaloni, leader of the opposition in the Solomon Islands, will address the politics of investment in the development of minerals in the Solomons.

A major purpose of the congress will also be to discuss the geological concepts underlying the recent discoveries.

The congress will bring together from around the Pacific Rim a broad spectrum of geoscientists with knowledge of the geology, structure and orebody development in that area.

For example, Dr Sillitoe, a consulting geologist from England, will discuss Copper, Gold and Subduction — a Trans Pacific Comparison and Prof James Franklin from Geological Survey of Canada will look at hydrothermal deposits on spreading ridges in the Pacific.

Australia has been chosen as the congress destination because it is seen as the centre for Pacific hard rock exploration.

Special pre- and post-congress study tours have been arranged to places of geological and scientific significance in the region. Included are tours to various parts of Queensland, New Zealand, Vanuata, Fiji and Japan. There will also be tours to major gold deposits in Papua New Guinea and the Solomon Islands.

As development in the Pacific Rim is constantly changing, it is intended that this congress will become a triennial meeting.

For further information on the 1987 Pacrim Congress, contact the Congress Secretariat, PO Box 731, Toowong, Qld. 4066, Australia.

It really is a gold boom when Australia’s largest industrial and natural resource company, BHP, can live off its gold exploration and production interest to its shareholders by forming a new company. BHP’s new corporate structure — BHP Gold Mines — is buying all the parent company’s current interests in gold producers (mainly interests in joint ventures) which in the current year will give it about 170,000 oz of gold production. BHP Gold Mines is also acquiring a series of advanced exploration and blue sky gold projects in Australia and New Zealand. The object is to increase gold production to a 300,000-oz annual rate by 1990.

BHP will hold 540 million shares, or a 56% interest, in its new separately-stock-exchange-listed gold company while shareholders have contributed $215 million to take up 430 million shares in the new company at the 50 cents issue price.

The Australian and international investment markets have given the new company a very high status, with the recent share price giving it a market capitalization of more than $1 billion, 680 million. While there is no doubt about the quality of BHP Gold Mines’ production and exploration interests, the company is capitalized very highly, relative to current or potential gold production, compared to many other Australian gold producers. At current product levels, Western Mining, Kidston and Placer Pacific all have larger production. And several of the newer discoveries, like Lihir referred to above, and Porgera, another 600,000-800,000- oz likely annual producer in Papua New Guinea, are yet to reach production.

Although the Australian gold share market is running at record levels, and showing no signs of a break in trend, it is being underwritten by a lot of positive developments in the production and exploration area.

An Australian range of gold coins in denominations of 1/10th, 1/4, 1/2 or one ounce has just been launched and warmly received by local and international investors.

Known as the Australian Nugget, eac
h coin features an illustration of four famous gold nuggets found in Australia over the past century and a half. The Australian Nugget gold bullion coins are being sold for a price equal to 3% above the prevailing gold price, plus a handling commission. The new coins are available through more than 3,000 outlets around the country, including banks, stockbrokers and coin dealers.

In the first two weeks after release, 411,000 coins were sold to gold investors, representing 174,000 oz of gold. The original estimate was to sell around 130,000 oz of gold in the first two months after the launch.

Gold used in the coins, which is 999.9% fine, is derived from the mining industry in Western Australia and the coins are minted by a local company, Goldcorp Australia.

Australia’s mining industry often falls down in the public relations area and hence the $2.5-million redevelopment of the Mining Museum in the downtown area of Sydney is a welcome development. The Mining Museum has one of the world’s most ouststanding collections of mineral specimens but these have been locked away for decades in the traditional, dull showcase displays which used to dominate museum thinking in the past.

The new environment at the Mining Museum is concentrating on active and high technology displays with an element of participation and entertainment. One Australian mining company, North Broken Hill Holdings, has become the first corporate sponsor and will provide $50,000 as a donation to create “a simulated and dynamic volcano display” through which museum visitors will be able to walk.

Several of Australia’s inland centres with a strong historical role in the gold and coal industries have developed local tourist attractions, including shafts and tunnels where visitors can go underground to see mining displays and demonstrations. Apart from being commercially successful tourist and public interest ventures, these projects are also contributing to public knowledge and understanding of what mining is all about.

The latest project in the outback of Western Australia is seeing historic relics and equipment from the old Sons of Gwalia underground gold mine being relocated to a new site nearby and restored. The mine itself is being revived as an open cut. It has a strong link with history because Herbert Hoover, later president of the United States, was mine manager in 1911 when he spent a few years working as a mining engineer in the Western Australia goldfields.