MercoPress. South Atlantic News Agency

Falklands' gold potential dazzles the mind

THE only mines on the Falkland Islands at present are the type that explodes. But if South African mining entrepreneur Richard Linnell fulfills his dream, the Islands which saw bloody fighting in 1982 could double their gross domestic product - thanks to a gold mine.

Linnell is executive chairman of AIM-listed Falkland Gold and Minerals, which is prospecting for gold on the south Atlantic islands.

Before the continental drift 200-million years ago, the Falklands were part of the southern continent of Gondwanaland. The islands were originally adjacent to land that is now the South African seaside town of East London.

It is because the Islands were once attached to what is now SA that geologists decided to investigate whether gold or diamonds could be found and profitably mined there. After gold was found in the Islands' streams, an airborne geological survey turned up 23 target sites - places with possible mineralization.

Linnell says that, encouraged by these results, it was decided to drill to firm up the deposits, and list Falkland Gold and Minerals. The listing in November last year raised £10m. The first drilling began last month, and the second drilling will go into operation in May.

"We are testing to see where the geological anomalies are" says Linnell. "We are hoping that through this process we will find the source of some of the gold that occurs in the streams, and we may find other minerals." Linnell says that investors "loved" the new listing, which could have raised more than the £10m sought. "There is no question that gold is there," says Linnell, a former executive of BHP Billiton.

Linnell is the current chair of the investment committee at the New Africa Mining Fund, a private equity fund that fosters mining activities and empowerment in South Africa.

"It is probable that there are vein-type deposits - but we don't know how wide they are. It is not certain whether this will be viable - this is a real exploration play," he says.

Linnell says that if a gold mine becomes operational in the Falkland Islands, it could have a dramatic effect on the territory's economy.

The Islands are administered by Britain, although Argentina still maintains a claim to them. In 1982 the Argentine ruling Junta turned the claim into war which ended in defeat a few weeks later. Since then a permanent British garrison was established in the Islands next to a legacy of Argentine mine fields.

Falklands' total population, excluding British military personnel stationed there, is about 2500 people.

"With a mine employing 200 people, including dependents, you would see a growth in the population, and there would also be improved infrastructure and lifestyle" Linnell says. "If we found anything that was mineable, this would be the biggest industry on the Islands. "At the moment, there is marginal sheep farming, and a £70m-a-year squid industry - and we would need a medium-sized gold mine to match that."

Linnell says the project has received enthusiastic support from the Falklands Islands' population and administration. However a major drawback is the archipelago's harsh winter weather conditions, but even during snow and sleet, it should be possible to drill all year round, Linnell points out.

He says that gold is not the only natural resource that may potentially boost the Islands' economy, as oil exploration is currently also under way in waters off the islands.

By John Fraser ? All Africa.com