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30/08 - Finances keep new gold mine on hold

Cautious investors could stall a major underground gold mine east of Canberra, which will cost more than $77 million to build.

Almost a year after state and federal agencies approved Cortona Resources' gold mine at Majors Creek near Braidwood, the Perth company is yet to reveal a starting date.

In the company's 2012 annual report, chairman Clive Jones said financial markets' low appetite for risk would continue to influence how and when the mine would be funded.

''While Australia is well placed to withstand the current global economic and financial uncertainty, financial markets have exhibited a degree of precautionary behaviour and shown a low appetite for risk,'' Mr Jones said.

''These conditions will continue at least in the near term and will have some influence on how and when the Dargues Reef gold project will be fully funded.

''The board is aware that the transition from explorer through construction to producer will be difficult, but we look forward to the challenges transforming the company from a successful explorer into an emerging gold producer.''

Mr Jones said total capital development costs were about $77.6 million. The current 257,000 ounce mineral inventory, based on a gold price of $1600 an ounce, would return cash flow of about $112 million, at a net present value of $66 million.

In February, Hartleys resources analyst Mike Millikan said construction would begin this year and production early next year, and financing was expected to be completed soon.

Earlier this year Cortona announced it had secured $42 million from Deutsche Bank to begin developing the mine.

It said construction was to begin in the final quarter of this year.

The project will provide about 100 construction and 80 permanent jobs.

Mining equipment supplier Gekko Systems marketing manager Mick Alsop said the biggest costs for mining operators was trucking material from inside the mine to the surface.

Other big costs were concreting the void, ventilation and processing ore.

Cortona's planning documents show the box-cut mine and huge tailings dam will take about six months to build.

Eighteen heavy vehicles and 20 light vehicles will be used during mining.

Last year's state and federal government approval of the project saw Cortona's share price rise 9.68 per cent to 17c.

Yesterday the share price was a little over 9c. Managing director Peter van der Borgh did not return calls from The Canberra Times.


John Thistleton


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