KO Gold Inc chief executive Greg Isenor, speaking yesterday from Nova Scotia, Canada, said Santana Minerals’ announcement test drilling had uncovered an estimated 2.9million ounces of gold at its Bendigo-Ophir site was "huge".
In an update to investors late last year, KO Gold said Santana’s extensive drilling of the Rise and Shine shear zone over the past three years had outlined one of the largest gold deposits in Otago and provided a better understanding of the gold potential within the region’s high-grade shear zones.
Yesterday, Mr Isenor said KO Gold would announce today it had raised more than $C1million ($NZ1.2m) to start work on its Otago projects.
There was already a lot of interest in the area. There were a lot of exploration permits for the area, and "a lot of work" was to be done.
"It’s just the beginning, in our opinion.
"We’re going to be hitting it quite hard. There’s a lot of potential there."
Company vice-president of exploration Paul Teniere said it was its view that Otago remained "underexplored".
"The project at Bendigo ... was explored by previous companies.
"It’s just they didn’t have the funds available to really drill it out like Santana’s doing, but they’re following the same path that Oceana Gold did with Macraes, essentially."
Long-time mining project manager Mike O’Sullivan said he had no internal knowledge of Santana’s operations, but the information in the public domain indicated the project was "economic in anybody’s terms".
The Otago School of Mines graduate said unlike the "horrible metallurgy" Oceana Gold was dealing with at Macraes, the Santana site reportedly offered a simple metallurgy that would allow for about a 90% recovery of the resource.
Further, Mr O’Sullivan said there were a lot of gold mines around the world that were running on less than the reported 2.3g per tonne that Santana reported.
A "reasonable amount of drilling" was still required in order for the company to complete a pre-feasibility study, but that could be completed next year.
At that stage, there would be an indication of the value of the find.
"Don’t underestimate it — I think it’s a significant find."
University of Otago department of geology Emeritus Prof Dave Craw said the Rise and Shine zone had been prospected ‘‘numerous times’’ since the 1980s.
The company that would become Oceana Gold had a licence there then, but abandoned it when Macraes came on stream.
Several companies had come in since.
"The big difference this time is that Santana were prepared to drill deeper than earlier companies," Prof Craw said.
"That takes cash and bravery, and it may have paid off this time."
On Wednesday, after news of the discovery broke, the Australian Stock Exchange asked the company if it knew of any information that had not been announced to the market that could explain a change in the price of its shares from a low of A99c ($NZ1.07) to a high of $A1.25 that day, or the "significant increase" in the volume traded.
In a response published on the company’s website, it said it did not.
Central Otago Environmental Society secretary Matthew Sole said that without a lot more detail on what was being proposed by the company, the society could not comment in any meaningful way at present.
However, he said along with pastoral runs, the mining area covered conservation areas and various conservation covenants with high landscape, ecological and heritage values.
