Glass Earth shares up 22% on option to buy Coromandel goldmine
Tuesday November 20, 2012
Gold miner Glass Earth has gained rights to take over the Neavesville gold and silver prospect controlled by Canadian resource developer Eurasian Minerals.
A complex set of arrangements will see Glass Earth make limited up-front payments, with most revenue flowing to Eurasian once commitment to a mining operation has been made.
The announcement saw shares in Glass Earth leap 22% to 33 cents, although they remain 52% below their high point for the last 12 months.
Located immediately north of Newmont Gold's major producing mine, Martha Hill, Neavesville has been identified in the past as containing a JORC code-compliant resource, although the resource measurement exercise will be repeated and updated because of changes to the way JORC certification rules now work.
"The Neavesville project offers the opportunity to have management control over the development of a significantly advanced gold/silver project, with an already established (historic) resource, with the immediate objective to update and improve the potential of the existing Bluff resource," chief executive Simon Henderson says in a statement to the NZX.
The project also offered "tantalising new targets" to increase its size.
Long-time New Zealand gold mine developer Geoff Loudon, chairman of Nautilus Minerals, will take a 50% stake in Glass Earth's rights to the Neavesville project.
Eurasian will receive an immediate payment of $C85,567 in reimbursement for recent exploration costs and will be eligible before December 31 next year for an option payment – made either as 850 ounces of gold, its cash equivalent, or in Glass Earth shares – at Glass Earth's election.
Glass Earth will then have 24 months or until December 31, 2015, to produce an updated JORC resources report, at which point it will elect either to take over ownership of the project or walk away.
If it exercises the option to proceed, it will then be up for payments equivalent to 2% of net smelter royalties from the production of the mine, and additional payments of 75oz gold or its equivalent annually before the option exercise, and 100oz gold annually after exercise until production commences.
On completion of a JORC-compliant feasibility study supporting a mine construction decision, Glass Earth will make a payment in gold, or cash or shares to its equivalent value, on a 1:100 ratio up to 500,000oz on those and subsequently reported reserves. Above 500,000oz, the ratio drops to 1:200.
"What we like about this and worked hard to negotiate is that most of the payment occurs after we've got a positive decision to mine," Glass Earth's chief financial officer told BusinessDesk....
The AUSIMM conference included papers on both prospects.
Neavesville Epithermal Au-Ag Deposit, Hauraki Goldfield
R G Barker, L K Torckler and RL Brathwaite
131
Exploration of the Wharekirauponga Epithermal Au-Ag Deposit,Hauraki Goldfield
A B Christie,S D C Rabone, R G Barker and
R J Merchant
Hauraki Gold Ltd obtained both permits that GEL is looking at: 51-767 and 52-759. Both need 1500mtrs of drilling soon, the first one by April 2013.
Hauraki Gold is owned by EMX NZ (BVI) Ltd, which in turn is a wholly owned subsidiary of Eurasian Minerals Inc, (EMX on the TSX-V). EMX have about $40mill in cash, but a lower value of exploration assets than GEL. They don't pay a dividend either.
Eurasion is about 10% owned by Newmont, the CEO David Cole was from Newmont (video), and they have one or two other key staff ex Newmont. Their idea is to get hold of permits, do the initial process and then hand them on to explorers (including Newmont - Haiti permits), getting them to pay most of the exploration costs, but still keeping a finger in the pie (royalties). Eurasion only seem to have these two permits in NZ (no mention of them in the last annual set of books), curiously they are both close to Waihi. Barrick and Sprott Asset management are also shareholders in EMX.
Glass Earth Gold Doubles Placer Output in Central Otago, New Zealand WELLINGTON, NEW ZEALAND--(Marketwire - Nov. 20, 2012) -Glass Earth Gold Limited(TSX VENTURE:GEL)(NZAX:GEL) ("Glass Earth Gold") announced today it doubled its gold production from the placer (alluvial) mining operations in the Manuherikia Valley in Central Otago.
Production from placer operations at Drybread (Hecklers and Morans) is now achieving approximately 70-80 ounces of gold per week, doubling its output since last update (reported August 29, 2012). This higher gold production has been achieved in some lower grade areas and now, both gold recovery units are working their way to higher grade ground where further production increases and efficiencies are anticipated.
This production improvement builds off a modest base that averaged 10 oz/week of gold from a single plant in March this year.
View weekly gold production graph at: http://glassearthgold.com/i/newsrele...012_Chart1.jpg
View map of gold production at: http://glassearthgold.com/i/newsrele...v2012_Map1.jpg
Simon Henderson, CEO of Glass Earth Gold said, "We are delighted with the steady progress in our placer production and look forward to further efficiencies and improvements as we mine higher grade material during New Zealand's summer months ahead".
Cash flow from current operations are covering General and Administrative expenses and modestly adding to its exploration budget at the WKP prospect (north of the Martha mine at Waihi, North Island).
The recent announcement that Glass Earth Gold has acquired option rights to the Neavesville gold/silver prospect (just north of WKP) will mean an increased exploration focus in the Hauraki region. About Glass Earth Gold
Glass Earth Gold is one of New Zealand's most active gold exploration companies with landholdings proximal to world-class gold deposits and cash flow from its wholly owned placer projects. With an experienced geological team the Company is exploring promising gold prospects across both the North and South Islands. The Company held a net cash position of C$1.0 million at the end of Q2 2012.
In the North Island, exploration efforts are focused on large epithermal gold systems in the Hauraki Region, akin to the 10Moz gold equivalent Martha Hill mine, (Newmont Mining).
In the Hauraki Region, Glass Earth Gold has identified and developed significant ground positions around the active Martha Hill gold mine operations at Waihi. The Newmont-Glass Earth Gold Waihi West JV (Newmont earning in) and Hauraki JV (65/35), including drilling at the WKP discovery, are being actively explored and managed by Newmont in collaboration with Glass Earth Gold.
Glass Earth Gold has also defined several significant epithermal gold targets to independently explore in this region, including the Muirs Reef Gold project.
In the South Island, exploration efforts are focused on the Otago Region, home to OceanaGold's 7Moz Macraes Goldfield, for identification of mesothermal "Macraes-style" gold targets and revenue generation through placer (alluvial) gold production.
This also looks promising, because any increase in placer grade is pure profit when all costs have been met. No mention about having any more GRUs operating soon. But even two GRUs can generate millions of dollars in annual profits, from a modest grade area. As stated in this release, the grade should improve as they move along in their areas. By my crude calculations they'll each be in a grade of about 0.4g/m3 at the moment, if they're still running 65 hours a week. They can do more hours, run more machines, try higher grade spots discovered by the RC drilling. And the tuning of the machines might improve yet.
Simon Hartley — 21 November 2012
Active explorer and boutique gold miner Glass Earth Gold Ltd (TSX-V & NZAX: GEL) has taken an option to purchase a gold and silver prospect north of the Martha mine in the central North Island, in a 50:50 venture with well known mining entity Geoff Loudon.
If access agreements can be struck, Glass Earth hopes to initiate a “minimum” 5,000 metres drilling programme in the 30sq km block later this summer, which is mainly felled forest area criss-crossed with logging tracks for access, as opposed to expensive helicopter-borne transporting.
Glass Earth Gold, which is producing alluvial gold from tenements in the Maniototo in Otago, is expanding its central North Island prospects from three to four in holding its option on the Neavesville (CRRT) tenement.
Chief executive Simon Henderson said Neavesville offered an opportunity to manage and control an established historic resource with the “immediate objective” to update and improve data on the potential estimated resource.
This could be seen as an implication from the 35% holding in the WKP gold discovery to the immediate north with Waihi mine operator Newmont Waihi Gold – where the exploration pace has not always been to Glass Earth Gold’s liking.
Between the 1970s to 2007, several companies explored the Neavesville area.
Glass Earth director, Peter Liddle, said from Auckland that once the estimated resource was updated, to new international standards, a decision would be made on acquiring Neavesville from Eurasian Minerals Inc, (TSX-V: EMX) which has held the tenement for less than a year.
Historically, the area is estimated, from 63 drill holes totalling 8,900m, to have an estimated resource of 289,000 ounces of gold and 944,000 oz of silver, including one deeper resource having a gold grade average of 7.1 grams/tonne, or 107,000 contained oz from 470,000 tonnes of ore. A shallower resource of 3.2 Mt graded 2.7 g/t Au and 8.9 g/t Ag.
The main discovery area from historic and recent drilling has been on Trig Bluffs.
Christchurch-based Geoff Loudon is an international explorer and mine developer, having been a foundation director of Lihir Gold Ltd, and is at present chairman of Nautilus Minerals and L&M Energy; the latter for which Loudon's New Dawn Energy Ltd launched a full takeover bid in early-November.
At the end of June Glass Earth held $C1 million ($NZ1.25 M) in cash. In late-June Glass Earth clinched $2.95 M in a private placement to refinance the $4 M buy-out of its former Otago joint venture partner, then in early-October raised a further $456,000 in private placement, out of Canada.
Under the deal with Eurasian Minerals, the joint venture will:
Make an option payment of 850 oz gold prior to the end of 2013.
Undertake 5,000m of drilling and produce an updated JORC/NI 43-101 compliant resources report prior to the end of 2015.
Exercise of the option to purchase the shares in the company owning the Neavesville permits and execute an agreement to pay amounts equivalent to a 2% NSR on production from the permits.
Additional payments at the rate of 75 oz gold per annum, prior to exercise of the option and 100 oz Au after exercise of the option, until production commences, whereupon the deferred consideration and the additional payments paid are credited against 80% of the deferred consideration.
Upon producing a compliant feasibility study, supporting a decision to construct a mine, payment of gold in the ratio of 1:100 on all probable and proven reserves included in that report – up to a limit of 500,000 oz on those and subsequently reported reserves. Payment of gold on reserves above 500,000 oz would be in a reduced ratio of 1:200.
*Simon Hartley is senior business reporter for the Otago Daily Times.
- Additional reporting by Ross Louthean Attachments
Neavesville project technical presentation. (Adobe PDF File) Download (853KB)
Extra data from management here. I think this is Maori land, looks like access has to be arranged. Good and flat though, compared to WKP.
Are you ready to dip your toes in yet?? (You don't have to answer this )
Although, there hasn't been a response on the TSX, it's still at 19cents...
It's funny how the media portrayed GEL yesterday, "22% rise" wooaa the traders must have been clambering over each other to get shares. But really it was one small $3000 trade in the morning, where someone decided to take a bite out of a big 50,000 share sell order.
- When the market opens there will be 11,000 shares of that order at 33c left. (Update - The order is now filled)
Are you ready to dip your toes in yet?? (You don't have to answer this )
Although, there hasn't been a response on the TSX, it's still at 19cents...
It's funny how the media portrayed GEL yesterday, "22% rise" wooaa the traders must have been clambering over each other to get shares. But really it was one small $3000 trade in the morning, where someone decided to take a bite out of a big 50,000 share sell order.
- When the market opens there will be 11,000 shares of that order at 33c left. (Update - The order is now filled)
Hi Gonzo, sorry about the slow reply, had a busy day. So I didn't see GEL going up to 36c until now.
Am I ready to dip my toes in yet? I've been holding this share for years..in various amounts. I reckon it's a share you own when you are comfortable with other investments outside the sharemarket. It's not a sure bet, pays no dividends, but if things keep going like they are, GEL could easily be worth 10x or 20x current Mcap in future. The trouble is it'll be a step change, and no-one knows when it'll be. A big drill assay, a change in policy from a big player, many things could make GEL a target for takeover, or we could see them as partners in a mine at WKP for example.
ODT article: not much new there, although I'm now unsure if Neavesville holds approximate resources of 289,000oz or more than that.
Explorer and boutique producer Glass Earth Gold has taken an option to buy a gold and silver prospect north of the Martha mine in the central North Island, in a 50:50 venture with mining entity Geoff Loudon.
If access agreements can be struck, Glass Earth hopes to initiate a "minimum" 5000m drilling programme in the 30sq km block later this summer, which is mainly felled forest area criss-crossed with logging tracks for access, as opposed to expensive helicopter-borne transporting.
Dual-listed Glass Earth, which is producing alluvial gold from tenements in the Maniototo, is expanding its central North Island prospects from three to four in holding its option on the Neavesville tenement. Glass Earth shares were up more than 20% after the announcement, at 33c.
Glass Earth chief executive Simon Henderson said Neavesville offered an opportunity to manage and control an established historic resource with the "immediate objective" to update and improve data on the potential estimated resource.
Between the 1970s and 2007, numerous companies explored the area, but none of them subsequently went into production.
Glass Earth director Peter Liddle said when contacted once the estimated resource was updated to new international standards, a decision would be made on acquiring Neavesville from Eurasian Minerals Ltd, which had held the tenement for less than a year.
Historically, the area is estimated, from 63 drill holes totalling 8900m, to have an estimated resource of 289,000 ounces of gold and 944,000 ounces of silver, including one estimate of a gold average of 7.1g of gold per tonne, or 107,000oz from 470,000 tonnes of ore.
New Zealand-based Mr Loudon is an international explorer and mine developer, having been a foundation director of Lihir Gold Ltd, and is at present chairman of Nautilus Minerals and L&M Energy. Mr Loudon's New Dawn Energy Ltd launched a full takeover bid for the latter company in early November.
At the end of June, Glass Earth held $C1 million ($NZ1.25 million) in cash.
In late June, Glass Earth clinched $2.95 million in a private placement to refinance the $4 million buyout of its former Otago joint venture partner, then in early October raised a further $456,000 in private placement, out of Canada.
Glass Earth doesn't have to come up with a lot of immediate cash to hold the option for Neavesville. If they drill in the next few months and it looks promising, that will cost the partners a few mill for contractors, and they have to pay 850oz gold or about C1.5mill to Eurasian at the end of 2013. If a JORC mine feasibility looks good and say there's a 500,000oz gold resource, the partners will pay about C8.5mill across to gain the permit. Plus 2% of all gold produced later. Upfront fees of over C$10mill plus ongoing royalties. So I have two questions: How did they miss picking up Neavesville before Eurasian did, and why are they so keen now?
GEL should get the big permit above Neavesville, that will be cheaper for the company.
Oh ok, you are holding. I thought you were waiting for the perfect time to buy in, but like you said, when it goes it'll go in a hurry, so you don't want to miss out! I too hold a small position now, I don't wont to be too exposed to the big swings in price.
Yes, thanks SSB, not much new there, except the caption: which is technically wrong. It would appear that the placer work is doing a lot better than covering costs of gold recovery. It's also paying for G&A costs (Admin) and some exploration, if it keeps on trend. This would be after paying installments to Bob Kilgour, wages and repairs on the gear, and landowners royalties. I'll certainly be looking hard at the placer costs versus income, if they are split out.
The GEL price has dropped abruptly today, in a catchup with the TSX price I guess. I cannot explain the volume and drop over there, but there is a possibility some overseas holders have seen the presentation now placed on the GEL website, and have assumed a private placement is forthcoming. Maybe not though.
Brent Cook has brought investors into the share as well. Back a month or three, Brent Cook was live on BTV and said it was a real possibility (or a sensible outcome) that Glass Earth would be bought out by Newmont at some stage. This would have to be one of the reasons why the Neavesville project has been proposed. Let's face it, GEL appears to have a lot of other things going on, for a small company with limited cashflow in the past. They added a new prospect (not a cheap one to maintain in future) under the nose of Newmont, for a reason.
Perhaps the time payment setup for the new project is a way of stalling the need for new capital, in the hope that placer gold can fund a big chunk of it.
Perhaps the time payment setup for the new project is a way of stalling the need for new capital, in the hope that placer gold can fund a big chunk of it.
That would make sense.
Yeah, the SP is just playing catch-up for sure. I do hope it doesn't go lower than 25c though!
..another volume record set today: 260,549
Last edited by gonzo56; 26-11-2012 at 05:27 PM.
Reason: Volume update
yeh i agree with ez, if your looking for something long term (lets face it, thats what GEL is) its a very good PP offer. Think of it logically, this is the first time in the companies history where it is generating a fairly decent income and with time the costs of generating that income will reduce once procedures are put in place and the funding required to start this measure isnt listed anymore.
Also im hoping something is going to eventuate from WKP within the next 24 months, all the signs are there its just a waiting game now. But thats just my opinion, I'm a young investor and GEL was one of my first purchases so i think i may be a little attached
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Originally Posted by gonzo56
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