AXG - Antipodes Gold [formerly GEL - Glass Earth]

[elZorro]

I have been following the story behind the big GRU#1 for a few years now. First I couldn't understand why it was leased out after it had been refurbished by Dunstan Mining. It turns out it was probably being operated then, by the previous owner. Once it came off lease (to be replaced with a bigger unit on L&M's permit at Earnscleugh), it seems to have sat around for most of a year, when GEL could have generated placer income from multiple permits. I assumed there was something badly wrong with the plant. I asked Simon Henderson about this.

Q. Why has GRU#1 been out of action for so long? Surely its effect on cashflow will be immediate if working in the right area, so why the 12 month delay?

A. Could not agree more. We ourselves would have liked to have the plant working many months ago but, put simply, this was stymied by our then JV partner (who was really only comfortable with single plant operations). This is all history now, it was a little worse for wear on return so we are in the process of a significant refurbishment to the plant to put it into production alongside other operations in or before early June. (Second plant in and running next week, the big plant on probably the most important high grade resource as soon as possible).

If I read this right, the heavy use on the L&M permit during the lease will have worn out some of the metal-handling surfaces and wear parts. If GRU#1 is the 'big plant', then Drybread is also 'the most important high grade resource'. It looks like the unit will be operating by early June, rather than late June. That's only 6-7 weeks away. At least we're on track now - possibly Dunstan Mining was too short on capital before, to make much headway with the fitout for another placer operation.

Q2 2011 Exploration & Mining ActivitySouth Island placer work comprised ongoing mining at Gunclub, a drilling campaign at Drybread (a target in the Manuherikia Valley, also in central Otago), processing of drill samples and field mapping/sampling in Southland. South Island placer mining at Gunclub continued with twenty five pits completed and assayed to define and test the western lode ahead of mining. Resource definition drilling commenced at Shepherds Flat in July. Six drill lines are planned with eight holes and 165m of drilling per line.Drybread RC drilling has continued with 144 holes completed and two additional lines planned. Processing of these drill samples is ongoing. Council resource consents have been granted in respect of Drybread and the grant of a Mining Permit is imminent. This will allow 2 further Gold Recovery Units to be deployed –complementing production at Gunclub.Mining at Gunclub encountered a lower grade section of the resource, as indicated by drilling and trenching results, with consequent lower production. The rebuild of GRU #3 is nearing completion and will be mining at Drybread in Q4. The leasing out of Gold Recovery Unit #1, ceased in mid-June as planned. This unit is to be reconfigured and is planned to also commence mining at Drybread in early 2012.Q3 2011 Placer Exploration & Mining ActivitySouth Island placer mining at Gunclub continued although, inhibited somewhat by winter snows and the building of a large water storage dam. Production was down although the high New Zealand gold price almost offset this.Exploration continued at Drybread with further shallow drilling and sample processing. A Mining Permit was granted for Drybread on 26 August 2011. The drilling results are very encouraging and a Gold Recovery Unit and associated plant has been moved on site with gold production expected to commence in late November. Stage 1 drilling was completed at Shepherds Flat (57 holes for 709m) and results were encouraging. Stage 2 has been planned and is expected to start in December.Shallow drilling has also been carried out on 3 other prospects in the adjoining Maniototo Valley with good results.

Looking again at Drybread, GEL now has its own shallow RC drilling rig I think, and more than 144 drills have been assayed at Drybread in 2011, with the results being "very encouraging". Here's the permit map, and the satellite photo. Looks like flat ground, great road access, 877 Ha, that's a big mining permit.

This page from the GEL website shows the shallow drilling rig in use, could be at Drybread.

http://www.glassearthgold.com/s/Proj...eportID=450554