AXG - Antipodes Gold [formerly GEL - Glass Earth]

[elZorro]

GEL filed full documents with SEDAR in Canada on 28th March 2012. Anybody can access them, and here is the MD&A document, much more detail as I suspected.

http://www.sedar.com/CheckCode.do;js...j1obfTM3k-9:-1

Biggest news item as far as confidence in GEL: Newmont is going to drill another 6,000 metres at WKP in 2012, for more data.

That's 30 drills at 200metres average.

Business Combination

As announced on March 15, 2012 the Group acquired full ownership of its placer joint venture and associated mining equipment. The transaction involved purchasing the remaining 50% of the shares in Dunstan Mining Limited (mining operator) that it did not already own and 100% of the shares in Goldmines New Zealand Limited (the other 50% joint venture party). The acquisition cost consisted of cash and deferred cash of $3.2m and the issuing of 2.188m Glass Earth Gold Ltd fully paid shares (total consideration of approximately $4mill).

Taking full control of placer mining activities will enable the Group to accelerate and increase production capacity. In 2011 the placer joint venture (then 50% Glass Earth), contributed $752,000 in gross revenue and $274,000 in net revenue based on only one Gold Recovery Unit (“GRU”)operating. The group plans to commission two further GRUs. This, together with 100% ownership and increase in throughput should enable the Group to achieve its previously articulated production goals.

This is the reason for the pricing on the deal, in NZ$ it was about $5mill, in CAD$4mill.

GEL now has over $800,000 of mining equipment assets, plus another $900,000 from Dunstan Mining. The rest of the purchase price was deemed to be the value of the permits and access agreements.

See the annual books on the GEL website too: http://www.glassearthgold.com/s/AnnualReport.asp

[elZorro]

Here are some excerpts from the GEL annual report.

GLASS EARTH GOLD LIMITED
For the year ended December 31, 2011

MANAGEMENT’S DISCUSSION AND ANALYSIS
(All amounts stated in Canadian dollars, unless otherwise indicated)
Attention is called to a caution in respect of
Forward-Looking Statements - included at page 33

ANNUAL OVERVIEW
EXPLORATION
(please refer to the individual sections following for fuller description of the exploration
activities).
· WKP gold project in Hauraki, New Zealand (Glass Earth 35%)
Five, long (up to 720m), diamond drill holes provided a successful follow-up of the
encouraging results from the 2010 diamond drilling campaign on WKP West.
Ø WKP 27 intersected 152.4m @ 1.16 g/t Au including 1.4m @ 30.7 g/t
Au and 77.7 g/t Ag; ;
Ø WKP 28 intersected 49m @ 1.08 g/t Au and 3.32 g/t Ag; and a new zone
was discovered at WKP South (WKP 29);
Ø WKP 29 intersected 3.2 m @ 37.0 g/t Au and 17.0 g/t Ag:
Ø WKP 30 consolidated this discovery, intersecting 9.0 m @ 3.2 g/t Au and 2.6
g/t Ag;
Ø The strong resistor targeted extends both north and south of those drill holes.
Aeromagnetic and CSAMT resistivity geophysical surveys indicate that this
new zone has a strike potential of at least one kilometer;
Ø WKP 31 was completed in December to a depth of 598m. Initial assay
results include 9.7m of 17.2g/t Gold and 24.2 g/t Silver.

Glass Earth and its partner Newmont have committed to an extensive drilling campaign for 2012 of approximately 6,000m to advance this project.
·
MUIRS gold project in Mamaku, New Zealand (Glass Earth 100%)
An independent review of the Muirs-Massey Reefs area was completed in April 2011, leading to more defined exploration work.
Ø A 5 hole diamond/RC drilling program completed in Q1
Ø Further trenching over the recently detected high surface gold values (up
to 17 gm/t Au in situ rock chips) commenced in April 2011;
Ø Ten trenches were dug with a combined length of 235m and all, but
one, intersected significant quartz veining and were channel
sampled. Assay results received were very positive including 24m @ 5.72 g/t Au;
Ø A 17 hole drill program of approximately 2,345m at the Massey
Reef commenced in late November with the intention that it enable
a resource calculation to be undertaken for the Massey Reef;
Ø The first two drill holes have been completed at the Massey Reef with the
first drillhole (MSDDH08) penetrating a highly altered andesitic volcanic
unit with variable quartz veining throughout. Results included an intercept
of 17m @ 1.71 gm/t Au. The second drill hole (MSDDH09) reached 191m
with assays pending.
· OPHIR gold project in Otago, New Zealand (Glass Earth 50%)
Ø Metallurgical work on Ophir ore samples is encouraging, with between 82-
85% of gold recovered in gravity separation processes;
Ø Progress was made on the design and costing of a pilot processing plant for
the Wai-iti shear zone.;
Ø Additional drilling was undertaken (17 holes for 446m) across 8 shear
zones. Initial lab results are encouraging, including 4.2 gm/t Au over 8m
in OPH013, and 5.8 g/t Au over 6m in OPH014;
Ø Remaining samples from the drill program were submitted for assay by
cyanide leach;
Ø Additional work is being undertaken as a pre-requisite to a formal
proposal for capex and mining for the consideration of the Joint
Venture.

FINANCIAL
· Successful Fundraising – the Company raised a gross $2.9m by private placement
in late Sep/early October together with an additional $0.25m upon the exercise of warrants and options;
· The Company’s cash position as at December 31 2011 was $3,614,000;
· Financial results - The net loss for the year ended December 31, 2011 was
$1,714,000 including a non-cash write-off of accumulated exploration expenditures of $695,000.

PLACER MINING
· Placer mining continued with only one Gold Recovery Unit effectively operating at a time. Cash contribution from the Company’s 50% owned placer mining operation(s) totaled $316,000 for the year ended December 31, 2011;
· The placer joint venture owns 3 Gold Recovery Units and has mining permits and resource consents to allow all three to be operating.
· In March 2012, the Company acquired the other 50% of the placer JV for $4m incash, deferred cash and Glass Earth Gold Ltd shares (see Subsequent Event note on page 27).
· The Company intends to have a second GRU running in Q2 and a third in Q3.
This, together with increased throughput and 100% ownership should
ensure a significant improvement in gold production and cash generated.

Q4 2011 Exploration Activity
Progress was made on the Ophir project (50% GENZL) with the design and costing of a pilot
processing plant completed for the Wai-iti shear zone. Remaining samples from the Q3 drill
programme were submitted for assay by cyanide leach. Initial lab results are encouraging.
A programme of shallow drilling was completed across the Hindon and Game Hen targets
(East Otago). Six drill holes were completed at Hindon targeting gold-bearing shear zones
identified through geological mapping and rock chip sampling (up to 7.5 gm/t Au). Samples
have been submitted for assay. An additional eight drill holes were completed to target the
Game Hen shear. Rock chip sampling of this structure has indicated grade of 1.3 - 41.4 gm/t
Au, with anomalous (Macraes like) arsenic levels (up to 5000 gm/t).
At Sparrowhawk geological mapping and sampling was completed to investigate areas with
anomalous gold (identified in Q2 2011 soil sampling). Encouraging rock chip samples
returned values up to 8.73 gm/t Au. Trenching is to be completed in Q1 2012.
A programme of soil sampling was undertaken at the Moeraki project to test geophysical
anomalies parallel to the Hyde Macraes Shear Zone (identified in the 2007 airborne
RESOLVETM survey). Results were encouraging and follow-up sampling will be completed in
Q1 2012.

Q3 2011 Exploration & Mining Activity
South 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.

Q4 2011 Exploration & Mining Activity
South Island placer work comprised of ongoing mining at Gunclub.
Exploration continued at Drybread to provide grade control in preparation for mining. Pilot
mining commenced in November with a protracted settling in period.

A full analysis of Shepherds Flat drilling was completed and presented to Joint Venture
partner Placer Gold International who has agreed to proceed to stage two of the Shepherds
Flat Joint Venture.

A reconnaissance drill programme was completed at greenfields target Beatties (Maniototo
Valley). An area of encouraging grade was encountered, and a follow-up drill programme is
to be completed.
A second phase of drilling was completed at Kirk Creek to build on earlier positive results.
Results from this second phase of drilling downgraded this prospect.

Hauraki Region - WKP

Q2 2011 Exploration Activity
Helicopter supported diamond drilling continued with WKP 28 (April), WKP29 (May/June) and
WKP 30 (Jul/Aug). Results for WKP 28 & 29 were released on August 26 (see below) with
assay results awaited on WKP 30.

WKP WEST
WKP 28, confirmed significant low grade gold mineralisation, highlighted by narrow
intervals of high grade, and is consistent with strong ground-based resistivity (geophysical) surveying. This demonstrates the zone has potential for over 800 m strike and a vertical extent of over 250 m. To date, the five long, angled, diamond holes drilled have all intersected significant gold-silver mineralisation over broad widths confirming a potentially very large epithermal gold system.

NEW TARGET ZONE - “WKP SOUTH”
WKP 29, drilled westward (previous holes were drilled eastward into the WKP West resistor) targeted a potentially new mineralized zone to the south-west, represented by a strong resistor, intersecting an exciting zone of high grade gold-silver mineralisation.
The strong resistor extends both north and south of the current drill hole, with another drill hole WKP 30, (results pending) drilled beneath WKP 29, angling at depth and traversing the resistor for a length of 720m. Aeromagnetic and CSAMT resistivity geophysical surveys indicate this new zone has a strike potential of at least a kilometre.

Q3 2011 Exploration Activity
Assay results from the 720m diamond drill hole, WKP 30 were received after some delays at the laboratory. These results will be the subject of a separate press release. The intersection of andesites (the preferred host for epithermal mineralization) with rhyolites, in this large and fertile system, is encouraging. A substantial infill/expansion drill program is warranted.

Q4 2011 Exploration Activity
Drillhole WKP 31, drilled at a 68 degree dip southwards from the center of the prospect was
completed in December to a depth of 598m. Initial assay results include 9.7m of 17.2g/t
Gold and 24.2 g/t Silver. Remaining assays, geological logging and metallurgical testing are
underway.Significant recent drilling results at Central Zone, WKP Project
Drillhole ID From To Interval m Au g/t Ag g/t
WKP 31 146.1 155.8 9.7 17.2 24.2

Q4 2011 Exploration Activity at Muirs
The first two drillholes (of seventeen) have been completed at the Massey Reef this
quarter. Drilling commenced late November and the first drillhole MSDDH08 reached 86.5m
on the 13th of December. The drillhole penetrated a highly altered andesitic volcanic unit
with variable quartz veining throughout. Results included an intercept of 17m @ 1.71 gm/t
Au.

The second drillhole MSDDH09 reached 191m underneath and on section with MSHDH08.
MSDDH09 intersected quartz veining from 64.6m to 67m and silicic hydrothermal breccia
from 103m to 117m, assays are pending.

Mining at Gunclub (Gold Recovery Unit #2) encountered a lower grade section of the resource, as indicated by drilling and trenching results, with consequent lower production. The rebuild of GRU #3 was completed and commenced mining at Drybread in Q4. Gold Recovery Unit #1 is to be reconfigured and is planned to commence mining at Drybread in mid-2012.

C$392,000 for Investor Relations explained: The Company is developing an improved Investor Relations programme, which covers the Canadian and European investor base (including London). The objective is to ensure that the market is fully informed of Glass Earth’s progress as it enters an exciting time in its development path. Increased expenditure on personal presentations by the CEO and internet based dissemination of information, as assisted by IR professionals in Canada and London are budgeted to continue.

In 2009/2010, in tandem with the approach of limiting overheads, the Company placed significant effort into developing some its numerous placer gold targets and a near surface hard rock gold ‘pod’ deposit (Ophir) - both with a view to establishing smaller scale mining that could provide a source of ongoing revenue that would contribute significantly to the Company’s cash requirements.

Progress has been steady, with one placer mine in production and a 40 tonne gold recovery unit (“GRU”) leased out from December 2009 to June 2011. A replacement placer mine commenced in early December 2010. In addition, the Company has signed a Letter of Intent with a Venture Partner to provide funding of up to NZ$1.5m (circa C$1.1m) to develop 2 placer mines. These initiatives are expected to generate significant contributions towards the Company’s cash requirements.

In March 2011, several additional exploration staff were hired and a large office/workshop leased in central Otago, to use as a base for operations.

The Directors have approved a rolling 12 month budget that allows the Company to continue as a Going Concern based on this year's fundraising, the cash budgeted to be generated from mining activities and contributions from joint venture partners.

The Mamaku-Muirs and Central Volcanic Regions exploration expenditures, including
staffing, permit rental, resistivity surveys and field work are currently budgeted for modest activity through 2012 apart from trenching and drilling campaigns at the Muirs prospect.

The Otago Region is a major focus of Company funded exploration endeavour and mining activities.

Outstanding Share and Option Data

Subsequent to the 1:5 share consolidation on 18 March, 2010, as at March 26, 2012, the following items were issued and outstanding:
· 66,162,409 common shares;
· 2,828,000 common share purchase options with an average exercise price of $0.4361 per share and expiry dates of between March 27, 2012 and August 17, 2015;
· 9,106,500 unlisted common share purchase warrants with an exercise price of $0.35 per share and an expiry date of May 5, 2012;
· 5,102,840 unlisted common share purchase warrants with an exercise price of $0.35 per share and an expiry date of June 7, 2012;
· 5,517,790 unlisted common share purchase warrants with an exercise price of $0.50 per share and an expiry date of December 23, 2012;
· 340,000 unlisted common share purchase warrants with an exercise price of $0.50 per share and an expiry date of December 29, 2012;
· 2,027,426 unlisted common share purchase warrants with an exercise price of $0.50 pershare and an expiry date of January 6, 2013.
· 1,150,400 unlisted common share purchase warrants with an exercise price of $0.50 per share and an expiry date of January 8, 2013
· 2,665,949 unlisted common share purchase warrants with an exercise price of $0.80 per share and an expiry date of September 23, 2013 and
· 340,900 unlisted common share purchase warrants with an exercise price of $0.80 per share and an expiry date of October 5, 2013
There are no shares subject to TSX Venture escrow provisions.

Also in the annual report:

As at December 31 2011, Glass Earth held by itself or together withjoint venture partners, one of the largest portfolio of gold and silver focusedprospecting and exploration permits in New Zealand (2,700 km²), withapplications lodged in 2011 for an additional 7,300 km²..

I added up the areas for the permits they held at the end of 2011, I only came up with about 1,050 km2. It's about 1,184km2 now, with another 7,767 km2 applied for. 5,262 km2 of that is one big prospecting permit application above Macraes, 53297.

So I'm missing some permit areas that are fairly big, not sure what they are.

[elZorro]

The latest MD&A shows that there are a lot of positives already, more on the way.

Filtering through all this to see what the shareprice might do in the next few months, there is some dilution heading our way if the share price stays slightly above C35c, with over 14 million share purchase warrants coming through between now and early June. There is a possibility that some are selling off GEL just above this figure, to buy some of their warrants with the cash.

I just had a look, and in late November 2011 GEL was saying that GRU#1 would be heading for Drybread in early 2012. Now it's predicted to be just after all those 35c warrants have been either picked up or dropped, in late June. Of course Glass Earth raises no capital out of traders on the NZAX or TSX, they'll be keen on seeing the warrants picked up. The next raft of warrants are at higher prices, but by then, the cashflow figures from placer mining will be much better. So the next 2-3 months might be a time when the share doesn't move much, but will be a great time to accumulate GEL. There's also always the chance that something bigger gets discovered, with drills ongoing.

I've received the proxy voting forms for the AGM, to be held later this month in Canada. Nothing too contentious there, with the stock options clause for directors, employees and consultants to the firm being up to 10% of all the current stock, but that's the same as in previous years.

My only comment here is that Glass Earth can look a bit like a cosy club for gold exploration groups in NZ. If consultants are charging GEL their normal fees per hour, this shouldn't mean they are the only pick for JV partners, and also get to purchase large chunks of GEL off-market if it drops lower than it should, based on fundamentals. These parties are all insiders, effectively. On the other side of the coin, stock incentives are a much better idea than higher remuneration of directors and key personnel, for a greenfields explorer.

[Had a look at the financial report, looks like stock options might be offered to non-employees in lieu of payment for goods and services].

[elZorro]

ODT reports that another GRU is to be installed near Gunclub within 3 weeks. No photo? Unsure about the capacity of this unit.

http://www.odt.co.nz/news/business/2...-cash-retained

Still another refurbed unit to be installed in June, should be GRU#1 at Drybread.

Note to ODT: GEL technically has a few dozen permits waiting for approval from NZPAM. Current actual permit holdings are a lot less than 10,000 km2. This is written up correctly in the latest annual report, just out.

[elZorro]

Today, NZPAM posted the granting of mining permit MP53814 for Glass Earth.

It's called Pig Burn, and previous passing mention was made of this site in the 2008-2009 Exploration Vision. The NZPAM link to the area is being worked on, so I can't tell for sure where it is. It's inside permit EP53183, in the Maniototo area. Other placenames nearby might be Cambridge Creek, Cap Burn, Orangapai.

The permit is for 5 years, area is 45.57Ha, requires the processing of no less than 50,000 cubic metres per year, although this is standard. It could be this is the site that is destined to take the second GRU within three weeks, see latest MD&A report.

An archaeological report has been completed on the site.

Arch Hill Heritage Ltd. consultancy reports completed since January 2011Middleton, A. October 2011. Regent Theatre Dunedin: Final report on archaeological authority 2011/262 for Oakley Gray Architects / Dunedin City Council. Arch Hill Heritage Report No. 99.
____. October 2011. 189-195 King Edward Street South Dunedin: Archaeological Assessment for the Brocklebank Family. Arch Hill Heritage Report No. 98.
____. August 2011. Beach Road Oamaru: Archaeological Assessment for Lakes Consulting Group / Waitaki District Council. Arch Hill Heritage Report No. 97.
____. August 2011. 234-242 George Street, Dunedin: Archaeological Assessment for MRF Properties. Arch Hill Heritage Report No. 96
____. July 2011. The Beeches / Pig Burn Proposed Mine Area Archaeological Assessment for Glass Earth Gold Ltd. Arch hill Heritage Report No. 95.
Middleton, A. & H. Williams. July 2011. Oamaru Harbourside Walkway / Cycleway Final report on authority no. 2009/214. Arch Hill Heritage Report No. 94.
Middleton, A. June 2011. Takiroa Rock Art Site: Final report on authority no. 2010/03. Arch Hill Heritage Report No. 93.
____. May 2011. Drybread Proposed Mine Areas: Archaeological Assessment for Glass Earth Gold Ltd. Arch Hill Heritage Report No. 92.
____. May 2011. Ophir Post Office Final report on Archaeological Authority 2011/343. Arch Hill Heritage Report No. 91 Report to NZHPT.
____. May 2011. Ambrose Building, Gore Final report on archaeological authority 2010/330 for Mollison & Associates / Mataura Licensing Trust. Arch Hill Heritage Report No. 90.
____. April 2011. Vulcan Hotel St. Bathans: the archaeology of the waste water scheme earthworks. Arch Hill Heritage Report No. 89.
____. April 2011. Outram Blacksmithy, Hoylake Street: Archaeological Assessment for Gerald Rillstone and Lisa Chatfield. Arch Hill Heritage Report No. 88.
____. April 2011. 38 Derwent Street Archaeological Assessment for Daniel & Rayleen McCloy. Arch Hill Heritage Report No. 87.
____. March 2011. Vinegar Hill Gold Workings Archaeological Assessment for Glass earth Ltd. Arch Hill Heritage Report No. 85.
____. February 2011. Conroy’s Road, Alexandra: Five Schist Culverts. Final report on authority no. 2011/251. Arch Hill Heritage Report No. 83.
____. January 2011. Bannockburn Gravel Pits Archaeological Assessment for Central Otago District Council. Arch Hill Heritage Report No. 82.

[elZorro]

The permit map is now available on NZPAM, and the area is at one end of an unsually shaped permit EP53183, in a region below Ranfurly, near Orangapai. Note the strange crop circles, these might be centre pivot irrigator areas.The area to be mined looks like a braided river bed, not intensively farmed.

This area was/is part of an Aurora Minerals JV?

http://www.auroraminerals.com/LinkCl...=1967&mid=3750

I checked Aurora's background again, probably have it back in the thread, but Aurora Minerals has dropped all NZ permits, or they've expired. They're concentrating on Western Australia now. (ASX: ARM). The permit was 39267, a big one.

The permit MP53814 is 10% owned by Mark Gunton, Auckland (NZ Minerals). This is in keeping with all the other Otago permits held by Glass Earth.

[elZorro]

It might be time for another information request from the Glass Earth office.

It's a bit confusing, but it sounds like GRU#2 is working at Gunclub, GRU#3 is either at Drybread doing a pilot trial or is being refurbished to be placed at another site altogether, or there is another GRU#4 being refurbished, perhaps for Pig Burn, the new placer mining site.

GRU#1 is the only unit we seem to have photos of, and while it's probably the biggest equipment GEL owns, it has been out of action for nearly 12 months, but will eventually be deployed at DryBread (the largest placer permit) in June 2012.

While GEL says they had 2,700 km2 of live permits as at 31 Dec 2011, I could only tally about half that from the permit table, allowing for ones that had been dropped and picked up since. The permit list on the GEL website could include areas, along with relevant dates.

[elZorro]

Googled up this short interview with Simon Henderson, and just the few words are filling in some gaps.

http://www.menafn.com/menafn/qn_news...-03f511ad0db1}

Targeting 1Moz+ at Muirs, and of course it's 100% owned by GEL. Some of the gold is very shallow, and it's worth a lot more than when it was last mined, then purely taking out the bonanza grades before flooding set in. Muirs should be worth about as much as WKP to GEL, even if WKP goes over 3Moz. Still the issue of getting someone to front up with capital to mine it though.

On a day like today, when Heritage Gold is making scary moves, I'm pleased to be an investor with Glass Earth.

[elZorro]

From NZResources:

Glass Earth Gold sees WKP as having scope for 3 M ounces

Ross Louthean — 13 April 2012
Being an explorer with cash flow and substantial gold permits throughout New Zealand were two positive pointers detailed by Glass Earth Gold (TSX-V & NZAX: GEL) to the investor resource media group Stockhouse.

In a question and answers session Glass Earth’s chief executive Simon Henderson said the company also had the advantage of being a gold producer – from placer operations in Otago – to help fund its search process.
Henderson said New Zealand was chosen because of its “huge gold potential,” its strong gold mining history and the evidence shown by two large gold mines – Martha on the North Island and Macraes on the South.
Glass Earth Gold’s two leading projects were the 35% owned WKP gold discovery with Newmont Waihi Gold near Waihi and the 100% owned Muirs Reef project, further south in the Hauraki goldfield.
Henderson said WKP was advancing and could have potential to be a +3 million ounce project. The first hole there showed the size of the system with 156.1m grading 1.6 grams/tonne gold, and recent holes included high grade hits such as 3.2m @ 37 g/t Au.
He said work in the past year at Muirs Reef demonstrated a 650m long strike length of surface mineralization. The company was now undertaking a 2,500m diamond drilling programme to identify the depth and strike extent of this system.
Henderson said the company has about $C2 million ($NZ2.43 M) on hand with a burn rate of around $C120,000 ($NZ146,250) per month and much of this is being funded from placer mining profits.
Source: stockhouse.com

Here's the link to the item on Stockhouse.

In fact the wording from Simon Henderson was that WKP certainly has the potential for +3Moz.

The importance of this, is that 2-3 Moz is the stated trigger level for Newmont to be interested in opening up a new mine significantly removed from its current infrastructure. I had wondered why there was more buy interest over on the TSX for the last 2 days. GEL moving a bit higher today, still near the price of those C35c options.

I have emailed Simon with some questions yesterday, and true to form, I have very promptly received good answers from him directly. Here's one.

Q. With all the share options coming through at C35c, is Glass Earth keen to see these picked up, or in view of dilution to your own holdings, happy to see them left? What is the most likely outcome?

A.Yes, we certainly want them to be picked up,however it will be good to remove the “overhang” one way or the other. Dilution may result but "cash is king". The investment market for our kind of stock is fickle at the best of times and right now is especially challenging, so it would be foolish to turn down this capital. I'm in fact about to visit the Northern Hemisphere to talk with key warrant holders and the wider market, it's important we effectively communicate our progress and this year's potential. We're confident many of the warrants will be exercised but this is largely in the market's own hands.

[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