AXG - Antipodes Gold [formerly GEL - Glass Earth]

[elZorro]

In the last quarterly report, which I've only skimmed through so far, there are some grades attached to the non-current placer areas. These could be handy.

Placer exploration & mining work in 2011 was concentrated on Gunclub, Shepherds Flat and Drybread. South Island placer mining at Gunclub continued throughout 2011 inhibited somewhat by winter snows and the building of a large water storage dam.

Resource definition drilling was completed at Shepherds Flat (57 drill holes and 709m of drilling). Results were encouraging and a full analysis of drilling was presented to Joint Venture partner Placer Gold International who agreed to proceed to stage two of the Shepherds Flat Joint Venture.

RC drilling and pitting was continued at Drybread to provide grade control and resource definition in preparation for mining. Encouraging results allowed progression with mine planning. Council resource consents and a mining permit were granted allowing two further Gold Recovery Units to be deployed – complementing production at Gunclub.

Q1 2012 EXPLORATION ACTIVITY
In late March 2012, Glass Earth took full ownership of its placer gold production joint venture. Settlement of the transactions took place on March 19, 2012. Taking full control of placer mining activities should enable the Company to significantly accelerate and increase gold production capacity.
Glass Earth is continuing with gold production at the "Gunclub" mining operation while preparing for two additional operations to commence nearby in New Zealand's Otago region. Site preparation has been completed at the "Drybread" minesite, with the second placer Gold Recovery Unit ("GRU") mining operation being commissioned in late May 2012. The Company is also refurbishing and upgrading its GRU #1, which is expected to be installed and running as another operation at Drybread by June 2012.

A drill program was completed at Waikaia from the 6th to the 23rd March. A total of 34 holes were drilled. Three samples returned between 500 – 650 mg/m3 and one sample of 15,300 mg/m3 gold.

A second phase drill program was completed at Shepherds Flat with the completion of 45 drill holes and a total of 558m drilled. The average wash grade was 452 mg/m3 at a depth of 14m with an average thickness of 4.5m.

As we now know, GRU#1 is up and running as they'd hoped at Drybread, and Drybread appears to be an amalgamation of three separate hotspots into one permit. Shepherds Flat is a bit longer term, it's also a JV, and the reasonable grades appear to be about 14 metres down. A long way to fall, and a long way to dig.

So now, have a look at Waikaia, EP52844, 223 Ha. This is a more recent EP that Glass Earth obtained in the Southland region. It's not in the deep south, but on googling Waikaia I see that L&M Mining had a go at an adjacent permit MP41602 and stopped working on it when the gold price was not high enough. Waikaia Gold Ltd seems to be an amalgamation of interested smaller shareholders, and they're going to work it starting October 2012, in the style of the Earnscleugh permit. So it's a placer site, the flood plains of a good-sized river.

The map of the bigger MP area shows GEL's EP off to the west. But it's not far away, and my attention was drawn to the huge grade they've found there. Just one of the shallow drills, sure. 15.3 grams per m3, about 7g/tonne. If you average the three drills with good grades, you'd get 5.5g/m3. We are told that a GRU needs just 0.2g/m3 of gold to break even. A single GRU could produce (if the three sample areas kept going) 5.3g/m3 x 50m3/hr x 24 x 7 = 44,520g spare gold per week, or 1436 ounces per week, nearly 75,000 oz/year.

This would be a gross income of $150mill a year. It's only 5 grams in a cubic metre, but I have to admit gold is a very rare element.

This is all conjecture, who knows, there might be grades like this in parts of Drybread too. Relatively small areas with these grades will make a big difference to the profits. It is curious timing that the drilling at Waikaia was mostly completed just before GEL struck a deal with Bob Kilgour in mid March.

In the April 2012 presentation uploaded by CHFIR, the placer gold production costs were lower at US$800/oz, and Waikaia was mentioned as one of the future placer prospects. From the production chart, Gunclub, PigBurn and even Shepherd's Flat are not expected to add a big percentage to the annual production.

Besides Waikaia Gold, who have enlarged their area with another EP, there are two smaller miners, and NZ Minerals Ltd, normally GEL's 10% partner in Otago permits, has a big prospecting permit application 54316 surrounding GEL's permit. GEL's permit reaches one side of a river or stream, the Garvie Burn.

From an archeological report for Waikaia Gold's MP, 2010:

The gold is largely located within a 200 - 400 metre wide channel on the Waikaia Valley floor,
sitting in a basal wash at an average depth of 19 metres.
The proposed area of mining extends for approximately five kilometres along the west bank
of the river from the Garvie Burn in the south to the Dome Burn in the north. While the main
proposed mining path is located between the Riversdale - Waikaia Road and the Waikaia
River, the proposed path also follows the main gold bearing channel a kilometre up the
Garvie Burn, south east of Waikaia - Riversdale Road in an area lying between this road and
Pyramid - Waiparu Road (Figure 2, 3).

I wonder if GEL read this article too, and made a beeline for the area. Waikaia Gold will work the true left bank of Garvie Burn lower down to the Waikaia, and GEL has an option to work the right bank a kilometre or two upstream.

Waikaia Gold was given the go-ahead in February 2012.