November 23, 2011
Ausgold Loses Its Chief Executive, But Not Its Focus On The World Class
Katanning Gold Discovery
By Our Man in Oz
Source >>
www.minesite.com/aus.html
It would be exaggerating to call Benjamin Bell a A$20 million man, but that is the value the market appears to have put on the recently departed chief executive of Ausgold. His theoretical value to the company, which has made what could be one of Australia’s better gold discoveries of the past 10 years, can be calculated by comparing the company’s share price on the day Ausgold announced Ben’s departure, A$1.38, to its recent price of A$1.15.
That A23 cent decline translates into a slide in market capitalisation of A$19.7 million. What’s more the price of gold since Ben quit on October 18th has risen by US$145 an ounce, so in theory the company’s share price should have gone the other way. But these are uncommon times on equities markets. In the circumstances, Minesite’s first question to the man who has inherited the running of the company was a natural one: “Apart from losing Ben has anything changed at the company’s Katanning gold project?”
“No change”, was the firm reply from Bob Pett, who has been called up from general duties as a director of Ausgold to the role of acting chief executive. “We will be sticking to the program that we worked out together before Ben left. I was involved then, along with the rest of our team, when we planned a very extensive drilling program that was put together hole-by-hole, so in that sense it is business as usual.”
For investors, especially newcomers to the Ausgold story, those comments from Bob are reassuring, for two reasons. Firstly, because he knows what he is talking about as he boasts one of the more successful track records in the Australian gold industry for discovering, and developing mines. Secondly, because the Ausgold project at Katanning is starting to take shape as a world-class discovery, which is much bigger than one man. Taken together that means the sell-off in Ausgold was very much a knee-jerk reaction to the sudden departure of a chief executive, especially one who did little to promote the stock and generally avoided contact with the media.
With Bob in top job, at least until he finds a permanent replacement, that minimal-promotion policy will change, because if there’s one thing he understands it is the importance of a high share price, especially when it comes to funding a big exploration programme. And the work at Katanning is certainly that. “We’ve got five drilling rigs on site now, with a sixth expected to arrive in the next few week”, Bob said. “It must rank as one of the bigger exploration projects underway in Australia today, but the results we’ve got so far certainly justify the A$12 million allocated in the current round of drilling.”
Even so, the market is impatient for assay results, a fresh resource calculation, and disturbed by the sudden resignation of Ben. But over the next few months those issues will fade, though, which is why the recent sell-off should be seen as an opportunity for investors to buy rather than a reason to sell. Because whichever way you analyse Katanning it is big, and getting bigger.
Over time, and depending on drilling success, the discovery (or re-discovery to be more accurate) of the geological structures cutting across Ausgold’s tenements in the south-west of Australia could be comparable to the 26 million ounce Boddington gold project of Newmont, which has certain look-alike characteristics and is located 100 kilometres to the north-west.
Comparing Katanning with Boddington earned Ausgold an early chiding from Minesite’s Man in Oz, largely because the overall tenement package was named Boddington South, which seemed a bit like using South Brussels as a name for Paris given the similar distance between the locations. However, that modest rubbishing taught Minesite’s Man a small home truth about Ausgold. The man who called to explain what’s afoot at Katanning last year when Minesite made the Brussels comparison was Bob, not Ben. What that says is that the man in charge today was really the man in charge back then, even if Ben had the title and key to the executive bathroom.
Reluctant as he might be to get back in harness as a day-to-day executive, Bob brings 27 years of mineral development experience to the job, plus the successful development of 10 mining projects around the world, plus training as a minerals economist. That final gong, earned as part of his Masters degree from Queens University in Canada means that Katanning (or Boddington South, depending on your level of enthusiasm) is in the hands of a man more interested in making money from mining than turning Australia’s south-west into a colander by using expensive drilling rigs.
At site, those drilling rigs are pursuing a number of targets, with a view to fine-tuning the geological understanding of twin mineralised structures, the eastern and western corridors. An orebody on the eastern structure, Jinkas, was mined with minimal success in the 1990s when the gold price was struggling to rise above US$300 an ounce. “We’re currently drilling out 4.25 kilometres of strike along the eastern corridor, through Jinkas and north to the Neighbours structure”, Bob said. “We’re doing that on 80 metre fences [lines of drilling 80 metres apart], with deeper holes at a number of locations. The deeper holes will tell us what’s happening deeper in the structures.”
News flow from Ausgold will accelerate over the next six months as assay results are received and the Katanning project moves towards a fresh resource statement. Whatever that resource number looks like, it will not be the end of work at Katanning. Rather it will be just the start, as future drilling targets are now being identified at the northern and southern ends of the eastern and western corridors. The distance between the Lukin prospect in the south and Jackson in the north stretches 18 kilometres, and while it would be unrealistic to expect economic gold along the full distance, that is a factor that cannot be discounted – especially given that the 18 kilometres of future drill targets are located within more than 150 kilometres of previously unmapped Achaean-age greenstone, a type of rock which has hosted most of the gold that’s ever been mined in the south of Western Australia.
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