Gold properties fall to bargain hunters

The mining adage that gold properties are worth whatever someone will pay for them holds true in good times and bad. And in these tough times, mines can be had, and are being had, at bargain-basement prices.

In the past few weeks, for example, several mines have sold for a fraction of what they might have fetched five years ago. Conquest Resources (YQR-V) took the bargain-hunting exercise a step further by buying a producing mine in Zimbabwe, a nation gripped by political and economic turmoil. The Toronto-based company bought the Zimbabwean company that owns and operates the Golden Kopje mine near Chinhoyi for a mere $560,000. No cash will change hands either, as Conquest intends to conclude the deal by issuing a 5-year convertible debenture.

Golden Kopje has produced intermittently since 1906, and has been in continuous commercial production since the mid-1980s, first under the ownership of Falconbridge and later by Thunderbird Mines. At last report, total reserves (in all categories) stood at 1.1 million tonnes averaging 5.04 grams gold per tonne.

Golden Kopje currently produces about 8,000 oz. annually, but Conquest hopes to boost output to more than 26,000 oz. following completion of planned development and shaft-sinking. The company also produces gold on a pilot-scale basis from its Glencairn and Shamrock mines, also in the Midlands gold district of central Zimbabwe. In the years ahead, Conquest plans to expand production from these mines by completing further surface and underground development, plant upgrades and expansion programs.

Closer to home, Vancouver-based Queenstake Resources (CCH-T) has set its sights on a past-producer owned by Campbell Resources (CCH-T). Acting with private partner Midwest Mining, Queenstake acquired a 6-month option over the shares of Campbell’s Mexican subsidiary, Oro de Sotula, which owns the past-producing Santa Gertrudis gold mine in Sonora state. Option payments are US$25,000 per month, with a total purchase price of US$2 million.

Gertrudis was an operating disappointment for Campbell, and Queenstake acknowledges that its remaining resources will require a higher gold price to be deemed economic. The company is, however, interested in the mining equipment and buildings at Santa Gertrudis and intends to move and re-erect them at its Magistral project, in nearby Sinaloa state.

A recent feasibility study pegged Magistral’s minable reserve at 6.15 million tonnes grading 1.86 grams gold per tonne, with a stripping ratio of 5.6-to-1. Four discrete pits will be mined and heap-leached, along with tailings.

Queenstake will also attempt to find a partner to re-activate Santa Gertrudis once gold prices improve. If successful, Campbell will be entitled to a third of any proceeds.

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