smh article - 20/5/09

Golden West deposit goes for a song
Jamie Freed
May 20, 2009
GOLDEN West Resources is no stranger to controversy. In the five years since its listing, there have been fist-fights at its annual meeting, company files handed over to the Australian Federal Police, anonymous complaints from shareholders to the corporate regulator, and links to the Melbourne underworld figure Mick Gatto.

And now, in a move that has raised eyebrows among shareholders, one of the projects that formed the basis of its float, the Dohertys gold deposit in Western Australia, is being sold to Classic Minerals in return for a $2000 option and a minimum exploration spend of $200,000 over three years, after which a 90 per cent interest can be had for $80,000.

There are fears this could represent a classic case of buying high and selling low - but from the same person.

Golden West was formed through projects vended in by a Kalgoorlie prospector, John Doutch, who is now an alternate director of the company.

When Golden West floated, Mr Doutch's company Lingchip received an initial 350,000 shares plus a $20,000 fee and later gained another 5 million, when the combined gold resources at Dohertys and Wiluna West reached 100,000 ounces.

Dohertys contains about 20,000 ounces of gold, meaning Lingchip effectively received 1.35 million shares in return for the project. Those shares are worth $620,000 based on yesterday's closing price of Golden West but were worth $3.4 million at the peak of the market. If Golden West's share price rebounds in the future alongside the iron ore price, the price being paid by Classic will look even stingier.

Classic is unlisted, but records from the corporate regulator have listed Mr Doutch, his brother Malcolm and Ken Allen, a director of another company linked to Mr Doutch, Fairstar Resources, as the shareholders.

Vicki Morton, who was appointed a director of Classic last month, told the Herald yesterday she was unable to answer questions about the company and its purchase of the Dohertys project. She said the company had no managing director. A Golden West spokesman was unable to provide any information on Classic. Combined, Lingchip and the Doutch family control 6.9 million shares, or 4.8 per cent, of Golden West.