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18/04 - Dargues mine to survive gold rout

Dargues Road at the Cortona mine site at Majors Creek. Photo: Alex Rea

Turbulence in world gold prices is unlikely to have any major impact on the Dargues Gold Mine project in the historic village of Majors Creek, developers say.

Located near Braidwood, to the south-east of Canberra, the mine's development has already involved the moving of more than 88,000 cubic metres of earth.

On Wednesday, gold prices continued to recover from their biggest drop in more than 30 years, reaching $US1378.80 an ounce.

Experts say this week's 14 per cent drop in the commodity's value meant a $15 billion reduction in the value of Australian goldmining businesses, raising questions about the sustainability of some mines.

Usually considered a haven for investors around the world, the gold price has bucked trends as sharemarkets also fell.

Unity Mining managing director Andrew McIlwain used an investor update on Wednesday to outline company assets of $24.5 million in cash and $9.1 million of gold bullion available for sale, after the company merged with previous developer Cortona.

Mr McIlwain said Unity planned to bring to the site major equipment from a idle mine at Kangaroo Flat near Bendigo, which meant a 10 per cent reduction in total equipment costs at the site.

''Whilst final costings are being finalised, the company has gained sufficient confidence that the use of the Bendigo plant will deliver meaningful capital and time savings,'' he said.

''An additional $3 million in savings over the life of the project relate to synergies realised through the merger such as reduced corporate costs.''

The $90 million project at Majors Creek faced difficulty in February after heavy rain caused a sediment basin to overflow into nearby creeks.

In the statement, Mr McIlwain said he expected further improvements in project capital costs and development timelines to be announced in coming weeks.

The area is the largest historic goldfield in NSW, producing more than 1.25 million ounces.

Canberra financial adviser and media commentator Daryl Dickson said gold, along with iron ore and coal prices, had a big influence on terms of trade.

''Certainly gold has been a lot more volatile this week than in the past,'' he said.

''A lot of traders will have made a hell of a lot of money from short-selling and the volatility has upset some of the markets.''

He said the impact on the wider Australian economy was hard to predict while other nations continued to print money, but he said the price of the Australian dollar could be affected.

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