OceanaGold Deal Sets Pricing For New Zealand Gold Properties

OceanaGold Deal Sets Pricing For New Zealand Gold Properties
A confluence of factors is causing gold mining activity to heat up in gold-rich New Zealand.

Obviously, record prices for gold are the primary driver. However, supporting this we have a new pro-mining commitment from New Zealand’s government.
This has led to increasing interest from mining companies in new gold exploration and development opportunities in New Zealand.

One company active in the resurgence in New Zealand gold mining that is already familiar to the Dynamic Wealth Research audience is Rua Gold Inc. (CAN:RUA / US:NZAUF). More on Rua Gold later.

High-grade gold property acquired for $30 million

The most recent gold news coming out of New Zealand is the announcement of finalization of the transaction with OceanaGold’s Blackwater Property, in the Reefton Goldfields district of New Zealand’s South Island.

Mid-tier gold miner OceanaGold Corp (CAN:OGC) is the leading player in the New Zealand gold mining industry today.

OceanaGold’s New Zealand gold production footprint already exceeds 15 million ounces of gold. This includes 10+ million ounces from its Waihi Gold Mine on the North Island, plus another 5 million ounces of gold from its Macraes operation on the South Island.

On June 25, 2024, OceanaGold finalized the sale of its Blackwater Gold Property to Tasman Gold (a subsidiary of Federation Mining). This was an all-cash deal with a price tag of $30 million.

The Blackwater Property hosts the historical Blackwater Gold Mine. This is a high-grade gold mining operation that came into being following a gold discovery in Blackwater Creek in 1905, south of the town of Reefton, in the Reefton Goldfields district.

The Blackwater Gold Mine was the largest gold mining operation on New Zealand’s South Island. It yielded over 700,000 ounces of gold in mining operations that continued until 1951, and the property contains a historical gold resource.

Blackwater was one of many high-grade historical gold workings in the Reefton Goldfields. There is new interest in gold exploration on these historical gold mining operations.

Much of this exploration interest is based on the fact that gold mineralization in many of these older historical gold operations is open at depth. The more primitive mining technologies of that era were unable to conduct mining operations at these depths.

Indeed, as we detailed in a recent Dynamic Wealth Research article, a recent major high-grade gold discovery has already been made – at depth -- in this same geological formation, by Southern Cross Gold.

So, why did OceanaGold agree to sell this highly prospective gold property to Federation Mining? Call it a wealth of riches.

In addition to OceanaGold’s major gold production operations, OGC is currently developing another multi-million ounce gold resource on that company’s WKP Project.

WKP has a maiden gold resource (Indicated and Inferred) of 1.4 million ounces, grading at 10+ g/t gold, derived from numerous very robust high-grade gold intercepts. And WKP is a mere 2.8 kilometers from the Waihi Mine.

Rua Gold’s CEO Robert Eckford offered a different insight into this transaction.
Really a 700k ounce asset is too small for OGC who are over $2 billion in market cap. They need to focus on bigger assets and therefore Federation had the opportunity to acquire this project.

Eckford is the Co-Founder of Aris Mining (CAN:ARIS), and he helped to build that company into a mid-tier gold miner. So he understands the strategic thinking behind these transactions.

The Rua Gold value proposition

For Federation Mining, if it is able to confirm the historical gold resource on the Blackwater Property (now the Snowy River Project), it will consider the $30 million acquisition price to be a bargain.

For investors, this deal helps in valuing these historical gold properties in the Reefton Goldfields. Here is where bargain-hunters may want to take a closer look at Rua Gold.

Rua Gold’s Reefton Goldfield Project borders the Blackwater Property to the west and hosts several of these high-grade historical gold mines.

Notably, all of the historical gold workings in the Reefton Goldfield Project have yielded higher grades of gold than Blackwater. All of these historical gold workings are also unexplored at depth.

Federation Mining paid $30 million for the Blackwater Property and its historical gold resource.

Rua Gold’s current market cap (as of June 25th) is only $26.3 million – and Rua is currently in the middle of a three-phase, 2,500 meter drill program on the Reefton Goldfield Project.

Gold mineralization on the Blackwater Property has already been confirmed to depths of as low as 1,500 meters beneath the surface. None of the historical gold mining operations in the Reefton Goldfield Project have been explored below 660 meters.

That is an enormous window of potential for new high-grade gold discoveries for Rua Gold. But it’s only half of the investment opportunity in the Company.

Rua Gold’s other flagship gold project is Glamorgan on the North Island. Glamorgan is viewed as virtually a geological clone of the high-grade WKP Project owned by OceanaGold.

Who holds that opinion? Geologist Simon Henderson.

Henderson personally staked both the WKP and Glamorgan properties. He was also part of a two-man geological team that drilled out the 10-million ounce Waihi gold deposit. Today, Simon Henderson is Rua Gold’s COO.

New Zealand gold mining investment opportunities

Gold is in the middle of a major, new bull market. However, gold mining stocks (and mining stocks, in general) are severely undervalued.

Indeed, a noted hedge fund short-seller recently announced taking a new long position in mining stocks. When even the shorts start to see mining stocks as being too cheap, that’s a strong signal for investors.

Why New Zealand? New Zealand had its own “gold rush” in the 1860s.

Over 44 million ounces of gold have been extracted from the North Island and South Island – most of it at very high grades. However, there is still plenty of gold in the ground, both on the under-explored North Island and via enormous brownfield exploration opportunities in the Reefton Goldfields of the South Island.

As experienced mining investors know, high-grade gold projects offer more downside support in these highly volatile markets for mining stocks. Current market conditions in mining stocks provide excellent entry points.

For investors looking at gold investment opportunities in New Zealand, Rua Gold offers a stellar value proposition, backed by strong leadership.

Rua Gold corporate presentation

DISCLOSURE: Rua Gold is a paid client of Dynamic Wealth Research.


Rua Gold's new acquisition more than triples its Reefton Goldfields land package in one of the world's least-explored high-grade gold districts.


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