Mining Solomons’ riches

At the end of the 1990s, the Gold Ridge mine was synonymous with mining in the Solomon Islands. The project — then held by Ross Mining — contributed 34% of the country’s gross domestic product until it was shut down in 2000 — after just two years of operation.

The closure came as violence between inhabitants of two of the country’s larger islands — Guadalcanal and Malaita — pulled the country into civil war, and it wasn’t until Australian and New Zealand forces arrived in 2003 that peace was restored.

A year after Australian troops landed, Australian mining interests followed in the form of Australian Solomons Gold (SGA-T) — a company willing to bet the peace would hold and mining would resume at Gold Ridge’s promising pits.

Australian Solomons Gold (ASG) paid Delta Gold US$20 million in cash for the project, and as it winds towards the completion of its feasibility study on the redevelopment of the site, it’s confident the investment will pay off.

Before violence erupted, Gold Ridge turned out 210,000 oz. gold at cash costs of US$222 per oz.

And while the plant responsible for that production remains intact, ASG is planning to refurbish it and add four more leach tanks to expand its capacity to 2.5 million tonnes per year from 2 million tonnes.

The expansion will bring the site’s average production rate to 135,000 oz. per year through the first three years. The total mine life is estimated at eight years.

While cost estimates won’t be available until a feasibility is finished (it’s due soon) Ron Douglas, ASG’s chief executive, estimates that cash costs will be in the low US$300-per-oz. range.

The company plans to go into production at the beginning of 2008.

The deposit is described as a low-sulphidation epithermal gold deposit, and is fully permitted and wholly owned by ASG.

The four open pits have a low strip ratio of 1.5:1, and the proximity of the pits has Douglas musing about the possibility of forming a single large pit.

The project has a measured and indicated resource of 28 million tonnes grading 1.54 grams gold for 1.5 million oz.

Beyond the startup of refurbishment in a few months, and the start of upgrades to the plant later in the year, ASG will be busy with a relocation plan for locals who have taken up residence on the property.

As for exploration potential, the company says the area around the mine site is still relatively unexplored.

ASG shares recently traded at $1.43 in a 52-week range of 95-$2.35.