The revival of mining in the Solomon Islands

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 to 34% of the countrys 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 Guadacanal and Malaita pulled the country into civil war, and it wasnt until Australian and New Zealand forces arrived in 2003 that a measure of 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 the promising pits at Gold Ridge would resume.

Australian Solomons Gold (ASG) paid Delta Mining 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 it’s investment will pay off.

Before violence erupted, Gold Ridge turned out 210,000 oz. of 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 sites average production rate to 135,000 oz. per year through the first three years. The total mine life is estimated at 8 years.

While cost estimates will not be known until feasibility is finished (it is due sometime in March) Ron Douglas, ASGs 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.

Ore from the four open pits have a low strip ration of 1.5:1, and the proximity of the pits to one another had Douglas musing about the possibility of forming a single large pit in the future.

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

Beyond the start-up of refurbishment in a few months, and the commencement of upgrading the plant later in the year, ASG will be keeping busy with its relocation plan for locals that had taken residence on the property.

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

ASG shares have a 52-week high of $2.35 and a 52-week low of 95. In Toronto on March 12 they were trading for $1.43.