Paper Millionaires In High Spirits At The Boom-time Diggers & Dealers Bash

The Age

Monday August 7, 2006

BARRY FitzGERALD

THERE are more millionaires per square metre in Kalgoorlie than anywhere else in the country at the moment.

Representing a big chunk of the 1500 delegates that have flown in for the Diggers & Dealers bash, which kicks off today, they are the mining company executives who can't believe their luck.

Three years ago when there was no money to pay themselves decent wages, they loaded up with options instead. Because of the depressed share prices, the options were usually numbered in the millions of units.

The boom since then means that there isn't a mining or exploration company that has not seen the options come into the money in a big way. All that is needed now is for the boom to roll on for a while longer so that those "paper" profits can be converted in to some of the folding stuff.

That's why the three-day bash could be more excitable than last year's, which was pretty upbeat anyway given the China boom story was in full flight by then.

Everyone is making money and there were more than a few happy to wager some of their good fortune at the Kalgoorlie-Boulder Racing Club yesterday.

The day was sponsored by Southern Cross Equities and billed as the "the greatest show on turf". Flemington need not worry.

Free entry for D & D delegates was by the flash of an airline boarding pass. Remembering that it wasn't that long ago when things were tough, plenty of delegates took up the offer, including the paper millionaires.

BILL Ryan has a D & D attendance record second to none. He's been to just about every one since it got started back in 1992.

But a thorough search of Kalgoorlie watering holes and eateries last night failed to turn him up. Billy ain't here this year.

A quick call put an end to the mystery; Billy is flat-chat with his tungsten group, Vital Metals, at its Watershed project in north Queensland.

Vital Metals, which floated not long after last year's D & D, is working towards becoming a 4000-tonne-a-year producer of the hardest and strongest of all the metals.

That would account for more than 6 per cent of current global production, most of which comes from small Chinese producers.

Tungsten prices have been nice and strong, so much so that at 4000 tonnes a year, Vital would be looking at annual revenue of $100 million.

Drilling with two rigs is now underway and by year-end, it is expected to in-fill and possibly extend the big resource previously outlined by Utah in 1978, which was before it became part of BHP, now BHP Billiton. Vital cut a deal on Watershed with BHPB in 2005.

If all goes according to plan, Billy expects to be in production in late 2008.

ROHAN Williams will be walking tall during the D & D bash.

That's saying something, given that Williams, managing director of the April 2002 float Avoca Resources, has to be one of the tallest rock-kickers at the conference.

The reason for Williams' pride is the continuing exploration success at the group's 100 per cent-owned Trident project at Higginsville, mid-way between Kambalda and Norseman in Western Australia.

Last week Williams revealed that the resource estimate for the high-grade Athena deposit had tripled to 343,000 ounces.

That took the total resource inventory at Higginsville to more than 1 million ounces of gold. Avoca's share price has been keeping pace with the building resource base, tripling in the last 12 months to the 95? a share it commanded on Friday. Avoca is now a $150 million company, proving there is still good money to be made with the drill bit.

Avoca expects to complete, by the end of the month, a feasibility study in to the development of the Trident.

"I am confident that Trident will now move rapidly to become one of Australia's premier new gold mines," Williams told the exchange. Because of its grade, its location, the strength of the gold price and the continuing exploration upside, few are about to argue with Williams.

The former WMC geologist certainly knows that part of the world pretty well. He worked at St Ives to the north, now owned by Gold Fields, and Norseman to the south, now owned by Croesus, and always had a hunch that in comparison Higginsville, a 600,000-ounce producer in the past, had been lightly explored.

Williams is making a presentation on Trident on Wednesday at D & D. That's not the best day for it because, by then, sore heads and a lack of sleep will be taking their toll on delegates. But such is the excitement with the stock, Williams can expect a big post-Berocca roll-up.

© 2006 The Age

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