Gold country

Private Christchurch-based mining and energy group L&M Group has begun work on its potential 110,000 ounce Earnscleugh alluvial gold mine project on the Clutha River flats near Alexandra.

Stock Exchange-listed and Wellington-based Glass Earth Gold also plans to begin mining soon a number of small placer deposits containing free gold that it has discovered in Otago.

Glass Earth geologists say these placer gold deposits appear to lie directly over significant hard rock gold deposits underneath. While the company’s key goal is to discover major gold deposits mining, some of the immediately available gold will help provide cashflow in tighter financial times to continue further exploration.

With current gold price just under US$1000 an ounce, New Zealand miners can sell the precious metal for around $1500 an ounce. This is a long way above the $600 an ounce gold was fetching in 2004 when L&M Mining was given its final consent for the Earnscleugh project.

Because of the low world gold prices L&M got out of alluvial gold mining (while holding on to the Earnscleugh mining permit) and the group switched focus over the past decade to exploration for coal seam gas, coal, lignite and recently petroleum.

Now L&M is activating its Earnscleugh project across the Clutha river from Alexandra in an area renowned for apricot orchards but where vineyards are now taking over.

The 150 hectare mine site is close by a conservation-protected area of heaped gravel dredge tailings left by the giant Earnscleugh steam-driven bucket dredges of a century ago which chomped up and down the banks of the Clutha leaving great areas of soil free gravel tailings behind them. Today that would be seen as environmental vandalism. It is somewhat ironic, but perhaps appropriate, that that slice of old mining damage is now conserved.

L&M has a long and proud company history of environmentally conscious mining in the West Coast, Otago and Southland, leaving behind high quality farmland usually better than before it extracted the gold.

L&M exploration manager David Manhire says the Earnscleugh site is virgin land where the gold has not been mined by the big dredges.

Manhire says the 150 hectares mine is estimated to contain 110,000 ounces of gold. The mine has an approximately seven year life.

Contractors moved onto the site in June to prepare the mine site. L&M will later bring in one of its stored floating gold recovery plants that will float on a pond.

Excavators will feed the deeper gold-bearing gravels into the plant which uses traditional flowing water methods to separate the heavy gold grains out of the gravel.

Glass Earth Gold is mostly looking up above the Clutha Valley on the Central Otago plateau ranges and valleys for its placer deposits.

‘Placer’ means surface gold found in sand or gravel – essentially the same as alluvial deposits. From the Spanish word placer meaning “sandbank” it is the mining term commonly used in Canada where Glass Earth is listed on the Toronto TSX Venture Exchange.

Otago has been a great place to find placer gold – historically producing about eight million ounces. Some ancient alluvial deposits were found up as high as 1000 metres and mined at times, usually, after the 1860s gold rushes.

Now of course Otago is the site of New Zealand’s largest hard rock gold mine at Macraes.

From data collected by a large regional aerial geophysics survey, flown by Glass Earth over most of Otago, the company’s geologists believe they have identified that the key vectors to the major mineralising structures which are recognised to host significant hard rock gold.

Glass Earth says some of these mineralising structures appear to lie directly under placer gold mineralisation.

One of the first places the company has focused on is the Ida Valley region where the company has completed 175 shallow RC holes mostly at the McAdie prospect, Poolburn.

Success at McAdie would be a precondition to moving into initial placer production in the Central Otago, says Glass Earth. This could start as soon as September or October once land use and water use consents are in place. Glass Earth says it has secured mining equipment and hiring of experienced local personnel for the placer mining operations is well advanced.

Glass Earth has also completed work on interpreting province-wide data and focusing on 15 highly ranked prospects in Otago which are scheduled for detailed exploration.

One of its top targets is Serpentine, 1000 metres high on top of the Rough Ridge range where detailed mapping have revealed individual rock chips returning high grades of 31 grams per tonne of gold, and the equally high soil grade of 2.1 grams per tonne.

Simon Henderson, the chief executive of Glass Earth Gold says there is “exciting potential” in the Serpentine gold prospect. He says his company had also uncovered a high priority greenfields prospect at Fruidburn southeast of Roxburgh, covering a 10 kilometre by seven kilometre area.

A key finding from the company’s work combining conceptual models with practical hard rock geochemical data was that in many cases, low angle shear related mineralisation is overprinted by small multiple high grade quartz veins, host to coarse gold.

It is these shallow high grade oxide ore systems that are being examined to determine their potential to contribute to hard rock gold production via a mobile crushing and gravity separation plant.

Henderson says at Ophir multiple low angle mineralised shears are overprinted by small multiple high grade oxidised quartz veins host to coarse gold.

The company has other colourfully named prospects – like Sparrowhawk, Game Hen, Nenthorn, Lots Wife – where there was a prospect of mining of these shallow high grade oxide ore deposits.

Glass Earth has also entered into an agreement with Canadian-owned Golden Fern Resources to earn 70 percent of the Rise & Shine prospect north of Cromwell by funding up to $900,000 of exploration by October 2011.