Dubai gold miner goes for double or nothing

Thani Emirates Resource Holdings has struck gold in Yemen with a much larger estimate of the size of its discovery than previously thought.

Gold bars are displayed to be photographed at bullion house in Mumbai in this December 3, 2009 file photograph. Gold prices hit record highs for a second day in a row on Tuesday and silver touched a 31-year peak. The rally in precious metals was driven by a combination of dollar decline, recovering crude oil prices and worries about sovereign debt problems in Europe. Gold hit a record above $1,500 an ounce, while silver extended its 31-year highs above $43 an ounce. REUTERS/Arko Datta/Files (INDIA - Tags: BUSINESS) *** Local Caption *** SIN302_PRECIOUS-_0419_11.JPGShow less

A Dubai company has more than doubled its estimate of the size of a gold discovery in Yemen as the price of the precious metal hits an all-time high.
Thani Emirates Resource Holdings, a privately held minerals company, confirmed last year its Wadi Madden discovery contains at least 2.2 million ounces of gold reserves.
Now, new drilling results have indicated the probable presence of an additional 2.7 million ounces.
But the mine has a long way to go before any of the gold makes it to market.
"Our costs in Yemen will be about US$300 million (Dh1.1 billion) until producing the first ounce of gold," said Abdulla al Thani, the chairman.
Gold hit record highs of more than $1,500 an ounce yesterday, driven by concern over the outlook for the US economy. Buying was spurred by the threat of a downgrade to America's credit rating from Standard & Poor's this week.
The company is continuing preparatory work for a mine at the site, despite the turmoil in Yemen.
Rishard Camball, the chief executive of Thani Emirates, said there had been only one short-lived problem with supplies to the remote site.
"There are still people on the site. It's business as usual," Mr Camball said.
The same applied to gold prospecting activities in Egypt, which Thani is undertaking jointly with the South African mining concern AngloGold Ashanti, Mr al Thani said.
The companies said they had obtained "exceptionally promising results" from their initial three drilling cores from the Hodine concession prospects near Egypt's historic Hutite mine.
The Egyptian prospect was significantly larger than the one at Wadi Madden, said Mr al Thani.
The joint venture has completed nine holes in a first-phase drilling programme to test the depth and extent of gold mineralisation at Hodine, located about 150km west of the Red Sea, but has not finished analysing samples from the last six.
"These are very encouraging results that would lead us to undertake further exploration," Dr Roric Smith, a senior vice president of AngloGold, said of the initial assay results.
"These are the first three holes, indicating we've done good geological work. There are very interesting gold grades that could well be economic."
The next phase of what could develop into a drilling programme involving hundreds of holes would be a $5m undertaking to obtain more information on the size of the gold deposit. If further "encouraging" results were forthcoming, the costs could escalate rapidly.
Although much depends on the quality of the ore, gold miners typically seek to establish the presence of at least 4 million ounces of gold as the basis for a commercial mining project, Dr Smith said.
Thani Emirates and AngloGold formed a strategic alliance in 2009 to explore for gold in the Middle East and North Africa region.
The partnership is focusing its efforts on the Arabian Shield, a large crescent of mineralised volcanic rock extending from southern Egypt through northeast Africa and Saudi Arabia to Yemen.
Dr Smith said the area was under-explored for minerals. In addition to gold, the partnership was hoping to locate commercial deposits of industrial metals such as copper and zinc, as well as silver and uranium, which are often found with gold.
Mr al Thani said Thani Emirates was already investigating a uranium discovery. He declined to reveal its location.
Thani Emirates and AngloGold are splitting costs equally for projects within the scope of their partnership, Dr Smith said.
The companies have obtained additional licences for gold exploration in Eritrea and have opened an office in that country. The partnership is also assessing opportunities in Saudi Arabia.
The Wadi Madden gold project had been withheld from the scope of alliance to enable Thani Emirates to demonstrate that it could develop a mine independently, Mr al Thani said.
He predicted regime changes in Egypt and eventually Yemen would be positive for investors that remained in those countries. Egypt's ministry of mines was already acting on a commitment to improve transparency.
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