By FIONA ROTHERHAM
Prospects are good for a new open-pit mine at Reefton on the West Coast, provided gold prices do not lose their lustre.
Australasian mining company Gold and Resource Developments will make a final decision on the mine in July next year.
The Gold and Resources board yesterday approved spending a further $A2.4 million to update a 1998 feasibility study on the Reefton project.
"This project has been on our books for a while and we see new opportunity for dusting it off," said company spokesman Angus Kennedy-Perkins.
If it goes ahead, the project could employ 300 to 400 workers during construction and around 200 when it enters production.
The company has already invested more than $A25 million in the project.
Resource figures indicate the potential of mining up to 100,000 ounces of gold a year at the cost of $A350 an ounce for a capital outlay of $A70 million.
Cost reductions through the introduction of pressure oxidation at Gold and Resources' only other New Zealand mine, Macraes, in north Otago, coupled with improved gold prices, had lifted the expected financial return from Reefton to make it viable, the company said.
World gold prices rose from 20-year lows last year to peak at $US328 an ounce in October and are hovering around $US290 an ounce.
The Australian Bureau of Agricultural and Resource Economics this month predicted gold prices would increase 7.5 per cent to an average of $US300 an ounce, possibly rising to $US315 this year.
But the bureau said there was still a question mark over what the central European banks would do despite their promise to limit sales and lending of their reserves.
Gold and Resources is also forecasting a higher NZ gold price in the next one to two years, which should further improve the Reefton project's economics.
The latest optimisation study will look at processing options for the Globe Progress deposit, and adding the higher-grade Blackwater resource could help extend the project's life to at least seven years.
Earlier this week, Gold and Resources won shareholder approval to merge with Australian mining engineering company Minproc, in which it has a 35 per cent stake.
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