Gold rush on mud pools

The Bay of Plenty's hot springs and mud pools may be hiding real gold.

Wellington mining company Glass Earth plans to spend $3 million to look for "epithermal gold", formed when hot fluids rise to the surface, in the volcanic triangle from Coromandel and Whakatane to Taupo.

Its exploration methods may also help it to find underground geothermal energy resources that do not have telltale surface signs such as hot springs and steam.

High world gold prices and rising power prices have sparked new "gold rushes" for both gold and geothermal energy, with state-owned Mighty River Power planning to drill new wells for geothermal power next year near Mangakino and near the Orakei-Korako thermal area.

Glass Earth was formed in 2002 by consultant geologist Ian Brown, former Otter Gold Mines exploration manager Simon Henderson and Otter company secretary Peter Liddle. It has raised British funds through London-based RAB Capital and a British Virgin Islands company, Kroy Holdings, which now hold 45 per cent of the shares between them.

It is raising a further C$3 million ($3.4 million) from British and Canadian investors and plans to list on the Toronto Ventures Exchange in mid-January.

Mr Liddle said the company had already spent $1 million on assessing Bay of Plenty geological data and had identified 29 untapped target sites for gold and about 25 for geothermal energy.

The company is working with Perth-based Geoinformatics, which can "see through" surface ash layers to analyse underlying geological formations from the air. Aircraft will be hired to fly over the target sites in February.

Mr Henderson said epithermal (above heat) gold was formed when hot water rose through cracks in the rock and cooled where it came into contact with colder surface water.

As it rises through the cracks, the hot, chloride-rich water dissolves minerals out of the rocks, and then deposits them again closer to the surface where it cools.

Even tiny amounts of gold in those deposits can be worth mining at present gold prices, swollen by the falling US dollar. Waihi's Martha Mine profitably extracts just 3.3 grams from every tonne of rock.

Mr Henderson said signs of gold could be seen in the Emerald Pool at Waiotapu, south of Rotorua, in orange clumps that looked like fungus around the edges of the pool.

"The orange colour is arsenic and antimony sulphides containing gold. Theoretically you could mine it, but the quantity is tiny."

Mr Liddle said Glass Earth would look to mine any economic quantities of gold it finds, and was seeking a partner to develop geothermal energy resources found in the process.

Meanwhile, Mighty River Power will start in March drilling the first of up to five test wells for geothermal energy in Carter Holt Harvey forests near the Waikato River northeast of Mangakino. Each well will cost between $3 million and $5 million.

Chief executive Doug Heffernan said drilling would also start next year on three test wells at Ngatamariki.