News

September 01, 2008

Gunson Benefits From Delayed Approvals As The Zircon Price Soars

By Our Man in Oz

It’s not often that investors thank a government for blocking the early development of a mine. Shareholders in the Australian zircon company, Gunson Resources, might soon be doing that because delays at the Coburn project could see it start production just in time to catch a strong upward move in the world zircon price. So one way or another it looks like delays in approvals and long-winded negotiations with a Chinese partner, have worked in favour of the project. Gunson chief executive, David Harley, isn’t quite so blunt in his assessment of what’s afoot at Coburn. “I wouldn’t go that far,” he told Minesite from his Perth office. “But there’s no doubt that we’re moving into a better price environment and that there has been a degree of dithering on the part of our partner.”

Putting an exact time, or cost, on the delays is not possible. However, it is worth noting that Harley announced plans to start a mine at Coburn back in 2003, at a time when the Australian dollar was valued at US60 cents, zircon was in modest demand, and not everyone believed that China would create a worldwide commodity boom. For the next five years, as Gunson negotiated its ways through a maze of red tape, Harley must have wondered whether rising construction costs and falling zircon prices...