Gold still shines despite denting from Dubai

AUSSIE gold producers won't be fretting too much about the retreat in gold prices from record levels in response to renewed strength in the US dollar, itself due to Dubai's financial crisis. Gold closed $US15.30 an ounce lower at $US1176.70 an ounce in the US on Friday, leaving it at a level at which if the gold producers can't make money, they shouldn't be in the game. On average, they are making plenty at these levels. A nice bit of research work from Mike Chester at Axiom Advisory tells us so. A survey of September-quarter production reports by Chester found gross margins for small to mid-tier gold producers were in fact lower than in the preceding June quarter at $A394 an ounce, due mainly to the strong US exchange rate. Not so good, so far, at any rate. But when the average realised gold price for the September quarter of $A1079 is compared with a current spot price of near $A1300 an ounce, it is clear that things have got a whole lot better for the industry. Average gross margins of about $A600 an ounce are magical stuff. But will they be enough to stop gold equities from getting beaten up in trading today? Not likely. TRANSOL Corp (ASX:TNC) has many strings to its bow, including the recent push into biogenic methane enhancement - a process that speeds up the natural process of coal seams bleeding off methane. It is one of a number of technology levers that we will be hearing more about in years to come as the coal seam gas sector sets itself up to replace power generation from coal, as well as competing with natural gas for gas export markets. But Garimpeiro's interest in the stock - apart from a share price of 1.2? and a market value of $12.6 million - is in its gold interests in Cambodia, of all places. It's a virgin country in terms of Western world exploration expertise but is now opening up, hoping to attract the sort of mining investment that its northern neighbours Laos and Thailand have secured in recent years. Cambodia's gold potential has been highlighted to the local market by OZ Minerals. It's got a discovery up there that it is expected will eventually shape up as a multimillion-ounce find with development potential. We will hear more about the future of OZ's Cambodian gold ambitions today when its new managing director, Terry Burgess, unveils his plans for the company after 100 days in the job. Transol will be more interested than most in the OZ briefing as it has a big chunk of exploration ground right next door to OZ's Cambodian find. An address next door to a multimillion-ounce gold discovery is always good news, particularly when the address is in an emerging gold province, not one already picked over to death. THE recasting of MIL Resources (ASX:MGK) as a Papua New Guinea-focused explorer has come to the attention of several international mining majors. Not that you know it by the 3.6? share price and $10.4 million market capitalisation of the former magnesium hopeful. But that could change next year when MIL sets about advancing its Amazon Bay vanadium-rich iron sands project, as well as punching some holes in its gold/copper plays elsewhere in PNG, either by itself or in partnership with one of the mining majors that have been sniffing around. Amazon Bay on the PNG mainland was worked up by AOG Minerals back in the 1970s and has a non-compliant resource estimate of 445 million tonnes of iron sands. The ultimate resource potential is considered to be much bigger and gives MIL a shot at the sort of success that other ASX-listed magnetite/iron sands projects with a vanadium bent have been enjoying. They include Aurox with its Balla Balla project in Western Australia and $50 million market capitalisation, and the $90 million Reed Resources with its Barrambie project, also in WA. Amazon Bay lends itself to a farm-in deal where the incoming party spends up big to confirm a major resource and takes the project up to a bankable feasibility study stage for a controlling interest. As significant as all that might prove to be, Garimpeiro's near-term interest in the stock is its Poi gold/copper project, 15 kilometres north-east of Amazon Bay, and MIL's ground position on New Britain, close to an area that was recently the subject of a $20 million deal that saw the world's biggest gold producer, Canada's Barrick, farm-in to copper/gold exploration tenements held by Coppermoly . At Poi some seven gold zones have been defined by steam geochemistry over a 27-square-kilometre area. Pan concentrate gold assay results have been the sort of stuff that gets geologists excited and have included results of more than one ounce of gold a tonne (Wacheri and Aluis). The New Britain tenements were explored by Esso and CRA back in the 1980s for gold and by Swiss Aluminium for copper in the 1970s. Again, there was plenty of early encouragement that was never followed up. EMERGING coal seam gas group (CSG) Red Sky Energy (ASX:ROG) is expected to come out of its trading halt today after confirming it has pulled in $4.5 million from the placement of 125 million shares at 3.6? a share, taking its cash kitty to about $8 million. Red Sky is now headed up by Rohan Gillespie, who up until 2006 was vice-president and chief operating officer of BHP Billiton's CSG business, one BHP did not go on with because of a cultural clash with its Houston-based petroleum division. Institutions that met up with Gillespie on his roadshow for the over-subscribed placement were taken by his summary of how a junior can be a success in the CSG industry - it's all about getting as much CSG prospective acreage as possible and then doing enough resource definition to make the CSG land bank attractive to the major energy groups, particularly to any number of those not yet represented in the industry. It's a strategy that worked a treat for Arrow Energy, now a $2.8 billion company.