The Bullabulling project near Coolgardie, itself 65km south-west of Kalgoorlie, produced its last gold for Resolute Mining way back in 1998.

Resolute was in recovery mode from the Bulong laterite nickel misadventure and it was swinging its focus to West Africa to take advantage of the advanced gold exploration opportunities up for sale from the likes of BHP and WMC.

There is a common theme in Bullabulling’s closure and the West African exit by the major mining companies – the collapse in the gold price to a 1998 average of $US294/oz ($A466/oz at the average exchange rate of US63c).

Much of the blame for the 1998 price collapse was laid at the feet of the Reserve Bank governor at the time, Ian Macfarlane, and his federal treasurer overseer, Peter Costello.

It was the year before that the pair fell for the fashion at the time for central banks to replace gold reserves with income-yielding overseas government securities.

Over six months in 1997, the RBA offloaded 167 tonnes (5.36 million ounces) or two-thirds of Australia’s gold reserves for an average of $A450/oz or $2.4 billion.

The value today is $A27 billion, with central bank buying funnily enough (minus Australian participation) in recent years driving to the metal to an all-time high this week before an easing in Thursday’s market to $US3,127/oz ($A4,965/oz).

Clearly the gold price was under the pump already in 1997, but the sale by the RBA was nevertheless a shock to the market. If Australia as a leading gold producer did not have faith in the gold price, who could?

Minerals 260:

As a Kalgoorlie-based drilling contractor at the time, Tim Goyder knew first-hand the pain suffered by the gold industry in those dark days of the late 1990s.

But ever the optimist, Goyder knew the gold market would turn. After selling the drilling business in early 2007, he went on to support a bunch of juniors, a high percentage of which have gone on to enjoy major success like Liontown (LTR) and Chalice (CHN).

After the Kathleen Valley lithium discovery by Liontown, certain non-core nickel-PGE-copper and gold exploration assets were spun-out to another Goyder creation, Minerals 260 (ASX:MI6).

Its original brief was to find another Julimar, the PGE-nickel-copper discovery made by Chalice to the north of Perth. No such luck straight up, leaving M16 as a $30 million company in the long queue of ASX explorers waiting for their time in sun.

Goyder and the management team at M16, led by former OZ Minerals, South32 and BHP operative Luke McFadyen, wanted to fast-track the process, and in a deal that marks Goyder’s return to the Eastern goldfields, a January deal was struck to acquire Bullabulling.

Bullabulling has been tucked away inside the Zijin/Norton gold business in the goldfields for a number of years but was no longer a strategic fit, with Zijin becoming a seriously big international mining group.

The MI6 deal to acquire Bullabulling for a cash consideration of $156.5m plus $10 million in MI6 shares delivers MI6 a 60Mt resource grading 1.2g/t gold for 2.3Moz, making it one of the biggest near-term production gold resources in the country.

The gold price on the January 14 acquisition announcement date was $A4,309/oz and as noted earlier, it is now some $A700/oz or 16% higher. The rise makes the implied $74/oz acquisition sweeter than it already was.

Bullabulling has what it takes to become a mid-tier producer. Just how big remains to be seen, with MI6 to first get stuck-in to an 80,000m infill and extension drilling program at Bullabulling. Although already extensively drilled, much of the previous drilling along the 8.5km of strike was typical 1990s shallow stuff.

So a bigger development picture is expected to emerge in time. To give the push to become a mid-tier producer and the billion dollar-plus market cap they now command some real momentum, M16 has pulled in $220m in a capital raise at 12c.

The surplus to the acquisition cost is earmarked for the drilling campaign which is due to start soon. Big name institutional overseas and local funds got on-board, with Goyder personally kicking in $12 million.

It’s a big whack by the chairman but given the scale of the raise, his holding going forward will be a lesser 6.4% on a fully diluted basis.

M16 expects to relist on the ASX next Thursday. Because it is a recompliance listing – one of the quickest seen in recent times – there will be no ringing of the bell for the company at the start of the trade.

But McFadyen will be presenting at the Resources Rising Stars Gather Round conference in Adelaide on the same day.

So maybe he will bring a bell to the conference to ring in M16’s arrival as a mid-tier gold developer, or perhaps a football to bounce down on the stage to signify its game on for the company.

Saturn Metals:

Saturn metals boss Ian Bamborough will also be bouncing the ball at the Gather Round conference.

He too has a good story to tell, with the company now fully financed to complete a definitive feasibility study to underpin financing for its Apollo Hill gold project south of Leonora.

Apollo Hill is a different one for the prolific gold region in that its 2.03Moz gold resource grading 0.53g/t is to be developed as a heap-leach operation.

Unusual for the region and WA perhaps, but low-grade heap-leach operations elsewhere in the world are among the most profitable operations in the industry, particularly in the US.

Saturn will be fully financed for completion of the DFS by pulling in $25m in a placement and SPP at 21.5c a share.

Ahead of completion of the raise, Saturn is a $60m company at 22c a share. Brokers following the stock had pre-raise target prices on the stock approaching $1 a share, with record gold prices not hurting.

Savvy money in the raise includes that coming from Dundee Corp to increase its stake to 19.9%, and Robin Widdup’s Lion Selection kicking in another $4 million to go to 17.1% if the SPP raises the full $2m.

“Lion has been attracted to the economics that result from being able to apply the low bulk mining and heap leaching cost profile over a large gold inventory, which has continued to grow,” Widdup said.

“Heap leaching is broadly applied in North and South America, Europe and Asia for gold production, but we don’t think the Australian market appreciates the significance of heap leach processing – this has provided the opportunity for Lion to buy a significant shareholding in Saturn at very attractive price compared to the economics on offer.”