Glass Earth Gold chief executive Simon Henderson
Glass Earth Gold, New Zealand's largest gold explorer, is
quitting the South Island and has sold its three Otago
production sites in the Maniototo for $NZ1.75 million to local
In leaving Otago, Glass Earth is booking $13.5 million in
impairments and asset writedowns to do so, having posted a
second quarter before-tax loss yesterday of $617,370.
Glass Earth Gold chief executive Simon Henderson said when
contacted yesterday: ''I'm very disappointed. We thought we
would be able to pull off the alluvial production ... but we
were dragged down from reaching it.''
During the past seven years, dual-listed Glass Earth has
spent more than $40 million in exploration, mainly around
Otago, having in March 2012 established the first of three
alluvial (loose) gold operations in the Maniototo, in the Ida
and Manuherikia valleys to create much needed cashflow.
But despite repeated successes in raising mainly Canadian
funding, Glass Earth remained plagued by cashflow problems,
including subsequent monthly repayments to buying out a
former joint venture partner.
Glass Earth is now refocusing, paring down operations to
three hard rock gold prospects in central North Island
targets, including two Newmont Waihi Gold joint ventures.
Several factors hastened Glass Earth's Otago exit, with
continuing losses from its alluvial Maniototo operations
because of declining global gold prices, lower than expected
on-site productivity, unseasonal weather conditions and lower
grades of gold per tonne.
Mr Henderson said the Maniototo alluvial operations had been
sold for $1.75 million to Skevington Contracting Ltd of
Palmerston in North Otago; the proceeds to be used to pay off
''While management devoted considerable time to improving
placer [alluvial] mining operations, its profitability
continued to be disappointing,'' Mr Henderson said.
In June 2012, Glass Earth clinched almost $3 million in
private placement funding to refinance its $4 million buyout
of its former joint venture partner.
The buyout was of Goldmines New Zealand Ltd and the other 50%
share in mining operator Dunstan Mining Ltd - both companies
included Alexandra-based miner Bob Kilgour as a director.
Mr Henderson said because of unseasonal rain and the gold
price plummeting 30%-40%, Glass Earth could not reach its
production and financial targets.
The buyout from Mr Kilgour's companies was $2 million in
shares and $2 million in cash, the latter to be spread over
25 monthly payments of $80,000, from proceeds from the
While sometimes attaining weekly production of around 100oz a
week, Glass Earth was falling short of reaching its target of
5000oz a year, in order to meet monthly repayments and retain
From the three Maniototo property sales, up to $1,110,243
will to be paid to Mr Kilgour for the alluvial mining assets,
with the balance of the $1.71 million used to pay
During calendar 2012, Glass Earth raised $7.08 million in
capital, starting the new year with about $3.17 million cash
Glass Earth delivered its second quarter result to June
yesterday, reporting gold sales of $1.51 million for the
quarter but posting a pre-tax loss of $617,250.
Including the writedown of the Otago mineral properties and
asset impairments, Glass Earth's after-tax loss for the
quarter was $13.76 million.
''Despite a movement to 24/7 operations in early June [in
Maniototo], this coincided with the wettest June and July
recorded in Otago, causing unexpected difficulties with the
mining fleet and consequent equipment failures,'' Mr
However, Mr Henderson was upbeat about the joint ventures
with Newmont at Waihi West, WKP and other adjacent projects.
He said that subject to roading access agreements, Glass
Earth would continue with its intended staged purchase of
Eurasian Minerals Inc interests at the gold-silver
Neavesville prospect, north of Waihi.
For its 2012 calendar year report 2012, Glass Earth's after
tax loss was up from $2.09 million in 2011 to $13.54 million,
from writing off accumulated exploration costs of $9.39
million, generally for exploration during 2005-08.
Gold revenue from Otago of $3.62 million was undermined by
increased mining costs, including establishment,
commissioning and refurbishment of plant costing $5.03
million, prompting a before-tax loss of $1.77 million from
the Maniototo mining.
Glass Earth Gold's South Island exit after seven years
Sold: Three alluvial (loose) gold production units in the
Ida and Manuherikia valleys, to a North Otago company for
Focus: Central North Island's Hauraki region. Three
hard rock prospects WKP and Waihi West in joint ventures with
Newmont Waihi Gold (both at 35% Glass Earth, 65% Newmont).
Purchase of nearby Neavesville prospect from Eurasian
Minerals to go ahead, subject to access agreement.