High-risk gold exploration companies are finding additional funding difficult to raise in the present economic climate, with Glass Earth having raised a total of $C17.4 million ($NZ25 million) in several placements since early 2005 and gaining listing on the mining-heavy Toronto stock exchange and New Zealand alternative exchange.
After completing 175 shallow-hole drill tests at four prospects around the Ida Valley in recent months, Glass Earth chief executive Simon Henderson said the focus was now on the McAdie prospect near Poolburn, which was "well advanced" in terms of securing equipment and experienced local staff.
"Bulk testing of the McAdie prospect, as a necessary precursor to proposed placer [alluvial gold] production in the Central Otago region, is scheduled to start as soon as requisite land-use and water-use consents are in place," he said in a statement released to the media yesterday.
While cash in hand for Glass Earth had dwindled to $C1.6 million by the end of March, compared with about $NZ4 million a year ago as exploration costs continued, Mr Henderson reiterated the $C1.6 million cash on hand was on target to fund Glass Earth through to July next year.
Glass Earth had recorded a small $11,000 profit for the year, compared with a $8.06 million loss last year, because of a foreign exchange gain when transferring 90% of its Canadian funding to New Zealand.
Mr Henderson said given the "uncertainty in the outlook for additional financing", Glass Earth had seen it "prudent" to reduce staff numbers and corporate overheads, and scale down large field offices.
"Glass Earth's medium-term aim is to develop into a significant gold producer, but it also sees earlier opportunities to create and capture value through successful exploration," Mr Henderson said.
In a market report yesterday, Mr Henderson said geologists had identified mineralisation structures, "recognised to host significant hard-rock gold" which lay directly under the free-flowing alluvial gold in the Ida Valley.
However, he also noted gold exploration involved a "high degree of risk"; few properties explored were ultimately developed and Glass Earth's properties "at present do not contain a known body of commercial ore".
Glass Earth's other three operations are continuing, with Australian mining giant Newmont supplying 63% of funding for exploration and test drilling in the Hauraki region, taking a 60% equity stake in the permit.
In Mamaku, between Rotorua and Taupo, ground sampling continues, as does other sampling and testing work within its overall 12,790sq km permit over Otago, including further ground sampling work at the Fruidburn prospect, 12km north of Beaumont.
In March, Mr Henderson said subject to resource consent applications, he hoped to begin mining operations between July and October this year at two of the four prospects in the Ida Valley, estimating a break-even target of 3000oz of alluvial gold and hard-rock mining to produce a further 6000oz.
The cashflow generated from production and subsequent gold sales would be used for continued drill-testing around Otago, he said at the time.
