GRD puts Otago gold stake on the market

Australia's GRD has put its controlling 56 per cent stake in Otago gold miner Oceana Gold on the block.

Several potential buyers have already run the ruler over Oceana, which owns the 170,000 ounce-a-year Macraes goldmine, the Australian Financial Review has reported.

GRD planned to make a final decision on the sale in the next week, the paper said, but investors were tipping GRD would quit the mining sector in favour of its new interest in synthetic gas production from green waste.

GRD has interests in engineering, construction and development businesses.

GRD executive director and Oceana executive chairman Brettney Fogarty told the AFR that GRD's Oceana stake had been under review since last September when GRD won the Lancashire waste project in the United Kingdom.

Australian miner Oxiana spent almost two weeks examining Oceana in February before deciding against adding the goldminer to its growing portfolio of gold and copper assets but other miners were interested.

Oceana, led by former Barrick Mines senior executive Stephen Orr, who joined the company in September 2004, has had a torrid time in the past 18 months.

It was gearing up to expand production from the Macraes open-pit mine by opening the adjacent underground Fraser's mine development. But its underground mining contractor, Henry Walker Eltin, collapsed in November 2004, leaving Oceana's expansion plans stranded.

Then, with fuel and power prices rising, operating costs began to increase rapidly at Macraes forcing Oceana into a major cost reduction programme, delaying the expansion plans for more than a year.

Now GRD plans to relocate Oceana's management back to Perth but Mr Orr has told GRD he is unlikely to move from Melbourne, leaving Oceana without a chief executive just when it is aiming to build its gold production towards 300,000 ounces a year.

Oceana reported a net profit of A$13.9 million ($16.43 million) in the year to December, on revenue of A$112.2m.

- NZPA