Ophir gold beckons again

They found gold at Ophir in Central Otago in the 1860s and now they’re finding it again.
Reports HUGH DE LACY.

When James Macandrew, the Superintendant of the province of Otago, in 1872 named one of Central Otago’s instant gold towns after the mine from which the biblical Queen of Sheba supplied gold to King Solomon, it was more out of hope than conviction.

There had been a rush on Ophir nine years earlier but already it was apparent that attempts to reap a golden harvest from the hard-rock mineralisation would always be hampered by lack of a reliable water supply.

There was gold in them thar hills all right, but while a substantial community became established and built a couple of handsome little stone administration buildings that still stand today, alluvial gold discoveries elsewhere drew most of the miners away to fields that could be exploited more easily.

Even so, shallow-depth mining at Ophir, 20 kilometres north of Alexandra, continued fitfully until World War Two, by which time 12,700 tonne of ore at a grade of 3g/Au had been recovered.

Now, with gold prices booming through insatiable demand from emergent economies and as a safe financial haven in troubled economic times, Ophir is back on the gold-mining map. A new gold mining company, Ophir Gold Ltd (OGL) is about to be launched onto the New Zealand alternative stock exchange by way of a reverse takeover, and Ophir’s mineralised reefs and near-surface gravels are to be targeted again for their bounty.

And to further brighten its prospects, OGL is applying a further exploration tenement in Central Otago, and is purchasing a second permit in Marlborough.

OGL was formed in early 2005 as Ophir Mines, changed its name to OGL the following April, and purchased its namesake 641 hectares with a EP40-427 permit from Centago Mining. The key drivers of the company’s formation were a 30-year veteran of Otago mining, Bob Kilgour and geologist Dr John Scott both of whom remain shareholders.

Over the past couple of years the company has re-shuffled its board, bringing aboard prominent Christchurch accountant Ray Polson as chairman, and adding the specialist expertise of former geoscientist Norman Stacey, merchant banker Alistair Ward, and mining industry consultants Murray Stevens and Vivienne Bull.

The company is currently undertaking a $2 million private placement to fund further exploration of the Ophir tenement, which is situated 70 kilometres northwest from Oceana Gold Corporation’s Macraes opencast and underground mines, which have yielded more than two million ounces of gold since 1990.

Two exploration programmes have been completed in the Ophir tenement, showing a inferred resource potential of more than 80,000 ounces of gold within the Wai-iti prospect, one of nine distinct prospects at Ophir. Initial drilling has yielding highly encouraging results. These have included seven metres at 4.8 grams per tonne from hole one and five metres at 5.2 grams per tonne of gold from hole nine (including a one metre section at 14.8g/t).

Modelling projections of the Wai-iti lode showed the high-grade mineralised package has a strike length in excess of 380 metres, and is continuous down-dip of more than 80m remaining open along strike, providing further potential to increase the resource.

Since re-structuring to pursue a stock exchange listing, OGL has set out to expand its interests beyond the original Ophir tenement. Also in Central Otago is the 1967 hectare Maritanga block,

EPA50-343, that covers the possible down-dip extensions of the Hyde-Macraes shear zone, over which OGL has applied for an exploration permit.

The third field on which OGL has its sights set, by way of acquisition from its present owners, is PP39-333 covering 24 square kilometres at Cullensville, near Linkwater in Marlborough. Cullensville is another strong prospect with both hard-rock and alluvial gold-bearing gravels, and covers the historic Mahakipawa field that was the subject of a gold rush in the late 1880s. Like Ophir, it was mined right up until the start of WWII, becoming famous for the size of the nuggets found amongst its alluvial gravels.

To develop its  tenements and increase the companies profile, OGL is aiming at a sharemarket listing in 2008. Rather than take the slow old route to public listing by finding the necessary 500 shareholders, the directors have targeted a reverse takeover of the former Perry Dines Corporation.

This was a company that went into receivership in 1985 in a blaze of accusations over its chairman, former national Party president Sir George Chapman, unloading his shareholding eight weeks earlier. The case became the first major insider trading scandal and led to the passage of the Securities Amendment Act – known as the insider trading Act – in 1988. Chapman was exonerated by the Securities Commission because the absence of insider trading legislation at the time meant he had not breached the Stock Exchange’s guidelines.

Since then Perry Dines has come out of receivership but is not trading, and its previously valueless shares were mouldering in shareholders’ bottom drawers until OGL came along.

Director Alistair Ward, a former chief executive of Golden Bay Cement and a co-founder of Auckland advisory services firm Campbell MacPherson, told Q&M that OGL hoped to float on the alternative exchange through its Perry Dines acquisition before the end of the year.

Drilling is planned to continue at the Ophir tenement to establish an expanded JORC compliant gold resource. The next drilling programme will also go some way to deciding whether a mine, if it is eventually opened, will be opencast or underground. Access agreements have already been reached with the owners of land in the area.

Ward said the venture’s prospects have been improved by the rapidly falling New Zealand dollar – it was hovering round the $0.76c mark by mid-May after peaking months earlier at over US$0.81c.  The global gold price has increased dramatically in recent years and has the potential to keep rising despite the recovery of the US dollar.

“The outlook for Ophir is very positive in terms of the global gold price, and the New Zealand sharemarket is recovering its confidence after the sharp dip it has taken since the end of last year,” says Ward.

“The global gold price is being driven as much by demand for gold jewellery in the emerging economies of China and India as it is by people hoarding it against global market uncertainties.

“We’re very confident that the New Zealand market will give a good reception to OGL when it floats.”