GGG Puts The Past Well And Truly To Bed With The Announcement Of A New Two Million Ounce Gold Resource In Australia By Alastair Ford
Remember Central China Goldfields? That down-and-out minnow that always seemed to show promise but never really delivered, and ended up by being dispossessed, African-style, of what might very well turn out to be a choice piece of real estate up in Tibet? If you thought the company had sunk without trace following those dim and dark days, get ready to be disabused, because you couldnt be more wrong. Now, one acquisition and one name change later, it is suddenly emerging as serious contender among the London-listed gold juniors, and already boasts brace yourselves a resource base of nearly two million ounces. No wonder shares in the newly named GGG Resources have more than tripled in the space of the last 12 months. And, given that that new resource was only announced on Monday 16th August, its perhaps no surprise that a fair bit of that strength has come within the space of the last week or so. GGGs shares did in fact leap up to a two year high of 7p in the immediate aftermath of the announcement that its jointly-owned Bullabulling project in the Coolgardie region of Australia now boasts 1.98 million ounces of gold at a 0.7 grammes per tonne cut-off. But the market euphoria that GGG had at last rejoined the ranks of the serious contenders wore off somewhat the following day, as one or two longer-term investors took the opportunity to take profits. But a share price at 5.78p is no mean feat for a company that saw its shares hit a floor of close on 1p back in the latter part of 2008.
Lots of companies hit the buffers late in 2008, and barely struggled on into 2009, but most of them at least still had assets. GGG was on the point of being, shall we say, politely removed from its Nimu discovery throughout that period, a body blow from which, in light of the wider economic circumstances, a betting man might not have expected the company to recover. But managing director Jeff Malaihollo staggered on, even putting in appearances at one or two of our Minesite forums over the course of the following months.
Then, in 2010, he pulled off a blinder of a deal. The Bullabulling project, which lies on ground formerly worked over by Resolute, and opposite a project thats been making strident progress under the ownership another company Minesite readers will be familiar with, Focus Minerals, came up for grabs, and GGG saw an opportunity and took it. At the time, it wasnt clear just how prolific the Bullabulling ground would turn out to be. When we picked up the deposit we were looking at high grade veins, says Jeff. Now it looks like itll be a large, low grade project. For comparison, he points to Catalpas project at Edna May, where the mining is low grade, at around 1.1 grammes per tonne, but its easy work for a fully mechanised operation. Profits, as Catalpas Bruce MacFadzean will confirm to Minesite in a few days time, are rolling in.
GGG is a fair way off production yet. But not as far as you might think. A scoping study is already well underway, and feasibility work should get underway in October. Aside from the obvious advantages that Bullabulling offers as a gold project in a US$1,200 gold environment, theres also the added upside that its open in all directions and that the strike is over 13 kilometres long.
But Jeffs focus now is more towards getting the project into production. Conceptual studies from a mere couple of months ago showed an operation mining from several pits. Now, with this latest resource upgrade in the bag, the idea is to mine from one big pit, as Catalpa does, a pit that Jeff reckons could be close to the size of the Kalgoorlie superpit, with a fair wind and the right sort of result from the scoping study.
Meanwhile, drilling will continue. Much of the current 1.98 million ounces is based on a reworking of old data, a reworking completed by consultants at CSA Global. The results from GGGs own campaign will start to roll in shortly, with the emphasis now shifting to what Jeff calls reserve drilling, or mine definition drilling. Theres no shortage of ground to drill, he says, but rather than spending all our money making the project bigger and bigger, well put it into production, and then focus on growth.
Back in May, GGG had a mere 400,000 ounces, a few good ideas, and a positive attitude. Come August it has nearly two million ounces, a scoping study nearing completion, and an investor base thats rapidly regaining a faith that long-since ebbed away. The plan now, says Jeff, is to push it forward and make it into a mining proposition. All of a sudden, that seems realistic. The drift at Central China Goldfields is over. The new thrust at GGG, the developer, is with us instead.
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