Glass Earth looking up despite tough environment

The fortunes of boutique gold producer Glass Earth Gold are gaining momentum, as weekly Central Otago gold production surpasses $NZ150,000 and the company confirms private placement funding well beyond a targeted $C3 million ($NZ3.68 million), from investors worldwide.

While having spent about $40 million in exploration in recent years, mainly in Otago, Glass Earth's cashflow has run perilously low at times, but in one of the toughest capital raising environments experienced in recent years it has secured further investment funds. Glass Earth has two alluvial (loose) gold recovery operations in the Manuherikia Valley. Recent success in gleaning up to 80 ounces per week from the tenements has prompted it to offer two small franchise operations - one of which has been taken up in the Ida valley.

From modest 10-ounce-per-week recoveries beginning in March last year, Glass Earth began recovering up to 70 ounces weekly from August to October and was now ''steadily'' getting 70 to 80 ounces per week, chief executive Simon Henderson said yesterday.

He described the potential of the franchise operations, in the Ida Valley and Maniototo, as ''modest'' prospects of potentially ''a few thousand ounces'', which in the Ida Valley might be a year's work for a three-man crew. Glass Earth had borne all costs of exploration, consenting and permitting of the prospects so far, and the franchisee would take an undisclosed minority share in any profits.

Mr Henderson said $C3 million had been sought in private placements, with two tranches closed and the third and last closing next week. He expected the final amount raised to be ''well beyond'' the original target. However, ''capital raising at the moment is tough out there'', he said.

So far about 50% of the private placement raised was from New Zealand interests, and the balance spread across investors from Canada, London and Europe, Mr Henderson said.

The entire private placement would be used for exploration programmes in the Hauraki, central North Island prospects for gold and silver, while in Central Otago the prospects are now cash-flow positive, with potential to grow.

Mr Henderson said he hoped productivity of the gold recovery units could be raised by 20% to 85% by the end of March, which should boost weekly production to 100 to 120 ounces.

For Glass Earth to access its Manuherikia Valley alluvial gold, it is taking five metres of ''overburden'' from above the target area. The two operations are then ''washing'' up to 1000cu m of material per day, to get up to 10oz or more of gold.

- simon.hartley@odt.co.nz