Santana Minerals has discovered more gold at a mine in Central Otago. With prices around record highs, could this fuel New Zealand’s next gold rush? Video / Alyse Wright
It’s one of the most significant discoveries of unearthed gold in New Zealand in four decades, according to the Australian mining company pitching the opportunity to investors.
ASX-listed Santana Minerals’ exploration activities have found decent stores of the precious metal in deposits across the privately-owned Bendigo Station, near Cromwell in Central Otago.
“You could probably say the gold rush has started,” Santana chief executive Damian Spring told Markets with Madison at the top of the most promising Rise and Shine deposit above the clouds.
Early indications suggested its Bendigo-Ophir project could produce 110,000 ounces of gold annually on average over a 10-year period.
With gold’s spot price sitting around record highs of US$2300 ($3755) an ounce, the prospective mine could produce more than $4 billion worth of export value over its lifetime, Spring said.
Add to that the relatively low cost to extract the gold stores through an open pit mine initially, and then an underground mine in its latter years, and net profits could be $2 billion.
“It’s outstanding economics,” Spring said.
However, the company needed $256 million in working capital to help achieve it.
He said with the current New Zealand mining royalties scheme about 10% of accounting profits, a “small” $90m could be returned to taxpayers on its current estimates.
ASX-listed Santana Minerals has discovered significant levels of gold in these hills above the clouds at Bendigo Station near Cromwell. Photo / Alyse Wright
It compared with the New Zealand’s largest producing gold mine, OceanaGold’s Macraes mine, which produced 130,000 ounces annually, worth about $500m at the current gold price.
Santana intended to apply for a full mining permit later this year - coincidentally timed with a coalition government with pro-mining members aiming to increase the sector’s contribution to our economy.
Spring revealed it was seriously considering an NZX listing too, given 40 per cent of its shareholding register was based here.
Santana acquired the site through its New Zealand subsidiary in 2020 and made its first gold prospects in 2021. However, its conviction and indication of gold ore density in the hard rock had continued to increase since then, with its most lucrative deposit showing 2.2 grams of gold per tonne of rock.
Santana Minerals CEO Damian Spring says its Bendigo-Ophir gold project is the ultimate opportunity in his career in mining. Photo / Alyse Wright
The discovery couldn’t come at a better time for Santana, and not just due to gold’s price and the political environment.
Production globally was flatlining, according to the World Gold Council.
New Zealand only added 6 tonnes, or 6000 kilograms, to global production in the year 2022, compared with the largest producers China, Russia and Australia each producing more than 300 tonnes.
Go on a journey to Central Otago and see the mining prospect for yourself in today’s episode of Markets with Madison above.
Get investment insights from executives and experts on Markets with Madison every Monday and Friday here on the NZ Herald, on YouTube and wherever you get your podcasts.
Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.
Madison Reidy is host and executive producer of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
