Glass Earth prospects for gold and cash
27 September 2006

By BRUCE MCKAY
It's been a long time since a goldmining company listed on a New Zealand stock exchange. There is only one other gold prospecting/mining company listed here and that is Heritage Gold.


It listed 20 years ago and today commands a market capitalisation of about $4.6 million.

Oceana Gold has its primary listing in Australia, though its production is all in New Zealand.

Now, another prospector, Glass Earth, plans to list as an overseas issuer on the NZAX market. In an initial public offering, it is issuing 40 million 25-cent shares to raise $10 million. For every two shares bought, the company will issue an option exercisable at 35 cents before October 6, 2008.

Glass Earth is a New Zealand-based company with its primary listing on the Toronto Venture Exchange under the ticker GEL. Subscribers to the share issue will be buying securities in a foreign company that has all its activities here.

Odder things have happened, but it could have been simpler to have a New Zealand-structured company with a listing in Canada, rather than a Canadian company with a listing in New Zealand.

Glass Earth has secured prospecting rights over large chunks of the North and South islands.

In the North Island it has rights over 9701 square kilometres, centred around the Hauraki Gold Region and the Central Volcanic Plateau. In the South Island the company has 21,600sq km in Otago.

Being able to secure prospecting rights over 31,300sq km of the country probably reflects as much as anything a lack of competition in the bidding for prospecting rights.

Recent mining activity in New Zealand has been all about energy exploration; precious metals have taken a rather distant back seat.

Glass Earth reckons it can be more successful at finding commercially viable deposits of gold because of its technology. This comes in two parts.

The first is a massive database of information about previous mining activity in its prospecting areas. Glass Earth holds prospecting licences for most of the Otago Province and, given the history of goldmining in the area, there is bound to be a lot of useful historical information. This information would be gathered together and turned into a database for computer analysis.

AdvertisementAdvertisementThe second part is new technology that allows the company to "see" below the surface layer of materials covering the country. This is where the technology and lots of big mining-type words will start to confuse.

It is believed that in the central North Island, mining companies have failed to find gold because of the inability to get below the layers of ash, pumice and whatnot from volcanic eruptions. The volcanic process itself has thrown out a lot of gold and somewhere below the layers of ash are commercial deposits.

The technology would be put in an aeroplane, which is flown up and down over the prospecting site in a defined grid pattern. The data collected is then analysed to find out where the more interesting prospects lie.

The final part is to get into the field and drill into the prospects to see whether the data gathered matches up with the drill samples.

If the samples are encouraging then more holes are drilled till a site is deemed economic. At that point, the Energy Ministry would be applied to for a mining licence.

That, broadly, is the theory. This is mining by computer rather than teams of geologists marching up hill and down dale looking for a suspiciously interesting outcrop of rock.

Mining by computer won't replace geologists in the field but it should make their lives easier by pointing out accurately where to look.

Of course, flying aircraft, crunching huge amounts of data and drilling test holes isn't cheap. Of the $10 million being raised, $5.65 million will be spent in the central North Island. The company has about 21 "targets" ready for drilling in the area.

In Otago $2.5 million will be spent on "airborne geophysics" and data crunching. The Otago pros