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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (45628)	10/21/2009 10:34:08 AM
From: LoneClone	Read Replies (1) \| Respond to of 193768

Greystar Resources Must Now Regret That It Put Up The Shutters In The Difficult Times Last Year By Charles Wyatt minesite.com Last week was a good one for gold shares with the price of the metal attacking US$1,050 per ounce. And one country that produced good results at this propitious moment was Colombia. It was here that Ventana Gold cut 84 metres averaging 13.66 grammes per tonne gold on the La Mascota zone at its La Bodega gold project. As a result its shares ended the week up C$2.93 at C$9.36. Not to be outdone shares of Colombian Mines Corporation added C$0.28 to close at C$0.40 following news that metallurgical test results on its Yarumalito gold porphyry property showed gold recoveries of 90 per cent for oxide material, 80.6 per cent for mixed oxide/sulphide material and 50 per cent for unoxidized samples. It is no surprise, then, to find that Greystar Resources with its multi million ounce Angostura gold deposit also in Colombia also rose by 39 per cent to C$4.39 million. Greystar used to be an old favourite in London, but it sank below the parapet during the difficult times at the end of last year when the financial world imploded. Since then chief executive Dave Rovig, who has just announced his decision to retire, has been fighting to achieve for Greystar the recognition it deserves. He appointed Geoff Chater as vice president corporate development a week before his own announcement, and this move gave an insight into group thinking. Geoff has been a director of Greystar for a year and this is effectively demotion, although not in his book. Up until last year he was manager of corporate relations for First Quantum, with its copper assets in Zambia and the DRC, and before that he did similar work for Nevada Pacific Gold Ltd., Eldorado Gold, Fairbanks Gold and Ivanhoe Capital. As a geologist he understands the game and will have a hand on the tiller while Dave Rovig moves up to chairman and a new chief executive is sought. In fact promotion will be so important for Greystar as it awaits the result of results of its feasibility study that he may find himself in the most important job. For a long time Greystar has had to assure investors that Colombia is a suitable country in which to do business. That job is becoming easier by the day as more high profile companies and individuals become involved in its gold projects. It is the fourth largest country in South America and it has some gold deposits of proportional size. Earlier this year AngloGold Ashanti received a permit to re-start work at its La Colosa mine where there had been some environmental problems. This project has estimated reserves of more than 12 million ounces, and future production is expected to amount to around 700,000 ounces per year. With La Colosa reopening, mining companies from across the world are now reassessing Colombia, as it is well underexplored due to its history of civil unrest. Brazilian billionaire Eike Batista snapped up a 9.5 per cent stake in Ventana Gold earlier this year for C$40 million, following the high-grade gold discovery that was made on the company’s La Bodega project. Frank Giustra, the boss of Endeavour Financial and charity buddy of Bill Clinton is also on the way to Colombia via Medoro Resources, which is buying a private local company called Mineros Nacionales which in turn owns the Zona Baja project at the Marmato Mountain. Currently producing 25,000 ounces per year based on a 800 tonnes per day operation there are clearly expansion plans for this one. You get the picture. Colombia is the now becoming the in-place for gold explorers. And Greystar is currently getting close to completion of a feasibility study on its Angostura gold–silver deposit in the north east of the country near Ventana. Dave Rovig reckons it will be finished by the end of this year or first thing in 2010, but it is fatal to be tied down to an exact date as that courts the possibility of negative backlash if there’s a delay. A positive pre-feasibility study announced back in March expected average annual production at Angostura to be around 510,000 ounces of gold and 2.3 million ounces of silver throughout a 15 year mine life. Using a very conservative gold price of US$750 per ounce for the life of mine, the net present value at a six per cent discount is US$942 million, and on those parameters the project offers an internal rate of return of 24.9 per cent. Interesting to think what these figures would be with gold at US$1,060 per ounce, especially with sensible analysts such as John Meyer at Fairfax IS saying that gold looks poised for a significant breakout as prices break through key technical levels. Greystar’s last resource update was in December 2008. This showed 148.9 million tonnes grading 0.78 grammes per tonne gold for 3.736 million ounces in the measured category. There was also an indicated resource of 182 million tonnes grading 1.34 grammes per tonne gold for 7.813 million ounces, so the total in the measured and indicated categories is 11.5 million ounces of gold in 330.9 million tonnes of material grading 1.09 grammes per tonne. After that comes the inferred resource of 3.472 million ounces of gold in 90.8 million tonnes grading 1.11 grammes per tonne. This is big stuff and it is sad to see that Greystar appears to be lagging several of its peers in the ratings. News of any great note tends to be thin when investors and analysts are awaiting the results of a feasibility study, but two things are certain. With gold at this level the company’s study will not disappoint. Also, time spent on a road show round the capitals to get everyone onside is bound to pay off. The majors are bound to be taking a close look at such a large project and shareholders would not want them to get it cheap.