The owner of the Sams Creek Gold Project, which sits atop what could be New Zealand's biggest undeveloped gold deposit, has slashed the value of the resource and taken impairments of about $7.7 million after stopping work on the site last year pending a pickup in prices.

Sams Creek Gold, which is owned by ASX-listed MOD Resources, posted a loss of $7.3 million in 2014, from a year-earlier profit of $1.2 million.

Sams Creek, in the Golden Bay region, isn't producing, so the company has no revenue. According to its accounts, Sams Creek took an impairment charge on the future recoverability of exploration expenditure of about $6.6 million, slashing its value to $3.1 million from $9.5 million.

The company adopted that $3.1 million as the appropriate carrying value of the project as at December 31, about the mid-point of an independent valuation it commissioned of about $2.3 million to $4.3 million. The accounts show it also impaired all of the $1.1 million investment interest in the project in 2014.


MOD Resources has a 60 per cent interest in the Sams Creek Gold Project, with the remainder held by OceanaGold.

MOD Resources farmed into the project by funding the staged exploration programme and issuing shares to OceanaGold and has the opportunity to reap up to 80 per cent of eventual earnings.

Exploratory drilling in 2013 intersected "numerous high-grade gold zones". The total resource was estimated at one million ounces.

In July last year, drilling was put on hold in the face of weaker prices and is expected to resume when there is a sustained improvement and "MOD can secure funding to advance the project towards potential production".

The spot price of gold peaked at US$1920.30 an ounce in 2013 and was recently at US$1169.01 an ounce.