Local Support Could Get Solomons Back In Gold

The Age

Tuesday November 30, 2004

BARRY FitzGERALD, RESOURCES EDITOR

GOLD production in the troubled Solomon Islands could resume under a $US90 million ($A114.5 million) deal struck over the abandoned Gold Ridge mine - the country's only mine - by a new Brisbane-based consortium that includes the listed Michelago.

The mine was abandoned and written off by Delta Gold in 2000 when civil unrest in the Solomons meant the safety of the workforce could no longer be guaranteed.

Delta was subsequently taken over by Placer Dome, while the mine ended up with US insurance group American Home Assurance.

The consortium buying the operation, Australian Solomons Gold, plans to spend up to $US90 million for the acquisition and redevelopment of Gold Ridge, where a 2.5 million ounce gold resource remains to be mined.

"The outlook for the mine is positive given that stability has returned to the Solomon Islands through the ongoing presence of peace-keeping forces, including Australian units, under the Regional Assistance Mission to the islands," Michelago managing director Peter Secker said.

He said ASG had received positive support from the Solomon Islands Government and Gold Ridge landowners about reopening the mine. Before the troubles hit, the mine accounted for more than 20 per cent of the country's gross domestic product.

Michelago is to fund its involvement by raising $20 million from a placement of 200 million shares at 10 ? each, with attached options.

The issue price compares with the group's closing price yesterday of 10.5 ? a share.