“Finding anything above 2 million ounces is harder and harder these days, so that would be a very sizable deposit,” Managing Director Paul Seton said Monday in a telephone interview from Auckland. “We’re targeting as many as 5 million ounces, with a low-side target of 3 million.”
Zedex, which has a majority stake in the Tien Thuan project in Binh Dinh, has explored three areas, with grades as high as 46 grams per metric ton, according to a January 30 statement. The area may have a “multimillion ounce” resource and now requires drilling, the filing said.
The company “has a potentially exciting project,” said David Woodhouse, a Hanoi-based portfolio manager at Vietnam Resource Investments. “There is money out there for gold projects, though most of it has been going to adding to existing production rather than to exploration.”
Zedex gained as much as 16% to 2.9 Australian cents, extending a 25% advance from January 30. Still, the stock has slumped 86% over the past year.
Production from a multimillion ounce deposit would dwarf existing output in Viet Nam, where Canada’s Olympus Pacific Minerals Ltd. in 2005 opened what it calls the first overseas-owned gold mine in the country since the 1940s. Zedex has a stake in Olympus Pacific, which produced 7,731 ounces of gold from Bong Mieu in the nine months ended September 30.
Gold gains
Investors worldwide have stepped up purchases of gold amid speculation the metal will gain as the global recession prompts governments to draw up stimulus packages, potentially hurting their currencies and stoking inflation. Gold futures have risen 3.6% this year, and 9.3% since the end of 2007.
The initial drilling program may cost about $2 million and Zedex was “well down the path” of raising the funds, Seton said. “Funding is a big problem for everyone at the moment, but gold is going to be on a general upward trend,” he said. “Money is going to be coming into gold.”
Vietnamese geologists explored the area in the 1990s and found gold values as high as 157 grams per ton, with about a third of samples exceeding 3 grams, the January 30 statement said. The planned drilling program would obtain more precise figures, Zedex said.
“The property is a very, very good one, very high-grade,” Seton said. “There is a swarm of veins at the top of a hill and also at the bottom. It’s a relatively simple production story. All we’ve got to do now is drill it.” (Bloomberg)
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