Exploring for a different gold

Peter Atkinson is planning to float the Waihi operations. Picture / Greg Bowker

Mining explorer Heritage Gold is hoping all that glitters is indeed gold as it seeks to spin off its Waihi exploration operations and float the new company on the NZX.

Details of the float are still being finalised for an announcement in the next few weeks.

Managing director Peter Atkinson said yesterday that the company aimed to raise "substantial" funding for exploration in historic gold mining areas at Karangahake and Waihi.

Heritage Gold reported a $2.6 million loss in the 2005 financial year but Atkinson says shareholders need to be aware such figures are usually an indication of exploration activity.

"All the successful miners today, virtually without exception, were originally exploration companies that made discoveries and developed them."

Returns for investors from exploration companies came in the form of capital appreciation rather than dividends until operations reached mining production stage.

"The only reason people would invest in junior explorers is for that reason," Atkinson said. "You get in cheaply but you take the advantage of any rises in price. If the company is successful, you take the advantage of dividends in due course."

A rights issue at the end of 2005 was oversubscribed and raised more than $1 million from shareholders for exploration at the Talisman mine at Karangahake.

Shares in Heritage Gold closed at 5.5c yesterday after trading in a range of 4.5c to 7.4c over the past 12 months.

Atkinson's comments follow the announcement this week of the merger between Oceana Gold and Australian mining company Climax, after a sell-down in May by majority shareholder GRD.

Atkinson said it gave Oceana an opportunity to develop outside of New Zealand.

"Stephen Orr [Oceana chief executive] has been hinting at something like that ever since GRD was taken off the share register a couple of months ago. He's been hinting at those corporate opportunities."

Heritage Gold

* Coromandel gold exploration company.

* Listed since 1986.

* Also listed on ASX and the Newcastle exchange.

* Market capitalisation of $7.2 million.

* Owns one-third of Broken Hill Cobalt.