Heritage Gold gets mining permit, 'difficult' period over

In an indication of the country’s changing attitude to mining and increasing offshore interest, Chinese parties may join Heritage Gold in a $40 million mining project at the historic Talisman site near the Coromandel.

Heritage Gold (NZX: HGD) executive director Peter Atkinson said the  permit had been a long time coming.

“A lot of people outside the Tasman never thought it would be possible to get a mining permit for the Talisman.

“A lot of overseas investors still think New Zealand is a difficult place to operate in, but that period is behind us.”

Heritage Gold was talking to several interested parties and was seeking a large company with narrow vein underground mining expertise and finances.

At the company’s annual meeting in September, chairman Geoff Hill told shareholders it was struggling to raise up to $5 million capital for the Talisman gold mine and was looking at projects with better investment prospects in Papua New Guinea, Chile and Australia.

He said Chinese groups had expressed interest and the price of gold in New Zealand dollars was helping, but regulation posed a barrier.

Today, Mr Atkinson said the National government’s attitude was starting to move things forward rather than delay them, he said.

The North Island’s first commercial gold mining permit outside of Waihi in 18 years, it paved the way for mining in an area that has historically produced 1 million ounces of gold and three million ounces of silver, with the potential to triple those figures, the company said.

The 25-year permit was approved by Energy and Resources Minister Gerry Brownlee and allowed joint venture negotiations, resource enhancement, mine planning, development and processing.

Heritage Gold would now apply for (notified) resource consent and Department of Conservation access, but Mr Atkinson was confident of achieving both.

“Using the experience we have gained in the area and our baseline environmental studies we are confident the consent process will proceed smoothly. We also have developed a sound relationship with the Department of Conservation by meeting all requirements of its access arrangement.”

An earlier scoping study suggested potential ranging from 0.83 million ounces to 3.3 million ounces of gold, with progressive development to sustainable production of 50,000 ounces a year over three years.

The medium term objective is 100,000 ounces of gold annually, along with a new treatment plant to process the ore.

Using an average gold price of $US800 per ounce and a discount rate of 17% the project had an indicative pre tax net present value (NPV) of $40 million.

Mr Atkinson said it was a welcome result after a long-term commitment.

“The Company spent some $10 million on exploration in the northern Coromandel and suffered the loss of all its gold properties when a 1997 amendment to the Crown Minerals Act prevented further development.

“Heritage then shifted its focus south to the Waihi district, building an attractive portfolio of gold properties with the investment of a further $9.5 million.”