LETTER FROM SYDNEY: RESOURCES
In Australia, gold fever makes a comeback
ED JOHNSON
theglobeandmail.com
Special to The Globe and Mail
It's been 155 years since gold fever first gripped Australia, transforming the young nation and causing its first economic boom.
Now the country is in the throes of another gold rush, as surging mineral prices draw big companies and small prospectors alike back to the historic gold fields.
Bullion miners and explorers are among the best performers on the Australian stock market, thanks to a spot price for gold of more than $630 (U.S.) an ounce.
Sales of metal detectors have also spiked in the past year, as prospectors head into the Outback hoping to find fortune.
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"Gold fever has no known cure," said Geoff Strang, who spent his vacation in the Palmer River gold field in the northeastern state of Queensland, hunting for the elusive nugget. "The only cure is to find more gold."
The first gold rush in Australia came in 1851 when adventurer Edward Hargraves, recently returned from California, reported finding a few grains while panning in Bathurst, in the state of New South Wales.
Within four months, the site was home to 1,000 prospectors. In 1852 alone, the state yielded 850,000 ounces of gold.
Gold rushes followed in the state of Victoria and then across the country, drawing hundreds of thousands of immigrants. Australia's population trebled from 430,000 in 1851 to 1.7 million over two decades later.
The old diggers targeted the rich quartz reefs and visible gold that was easily found. But experts say there are still millions of ounces of lower grade material underground called disseminated gold.
Thanks to modern mining methods and the higher price, it is now possible and economical to mine these reserves.
"Without the current gold price they would be off the radar," said Keith Goode, a precious minerals analyst.
Bendigo Mining has returned to the Bendigo gold field in Victoria, the site of a huge gold rush in 1851. The field produced some 22 million ounces of gold during a century of mining.
The company estimates there are 11 million ounces of high-grade gold mineralization still beneath the original workings and has dug 6.5 kilometres of tunnels that gradually wind to a depth of 850 metres to reach untapped bodies of ore.
Last month, Bendigo poured its first 250 ounce gold bar from its Kangaroo Flat Mine, marking the first production at the site in 52 years.
Managing director Doug Buerger is forecasting output of 200,000 ounces a year over three years, followed by 600,000 ounces at full production.
"This is just the first step in re-establishing this great gold field," he said, adding the documentation of the original miners had proved invaluable.
Another company tapping into Australia's rich heritage is Ballarat Goldfields, which began output in December on the site of the country's second great rush.
The company, whose shares have risen 10 per cent in the past year, is targeting production of 100,000 ounces a year, increasing to 200,000 ounces in three years.
Gold is Australia's fifth largest commodity export by value (estimated at $5.3-billion Australian in 2004-05), according to Australian Bureau of Agriculture and Resource Economics.
Mr. Goode predicted the spot price would continue to surge, driven by markets that no longer perceived currencies as a "safe haven" and massive demand in China and India.
"It is just a matter of time before we see gold prices at $1,000 (U.S.) an ounce," he said.
As big mining companies dig deeper and wider in search of profit, thousands of prospectors armed with metal detectors, picks, pans and shovels are venturing into the remote Australian bush in search of gold.
Ian Aitken, national marketing manager of Minelab, the Australian market leader in metal detectors, said there had been a 10-per-cent spike in sales over the past 12 months.
"The rising price has certainly had an effect on the grey nomadic fraternity," he said, referring to a small army of retirees who are among the country's most enthusiastic prospectors.
For Rita Bentley, president of the Prospectors and Miners Association, gold is more than just a precious mineral.
"It is one of the most critical things that has happened to this country," she said. "I think we have a responsibility to our predecessors to ensure that heritage continues." |
