Miner eyes prospect of Sardinian gold

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A bearded Australian gold miner rolls into the City of London next week hoping to interest bankers and fund managers in an intriguing, if slightly implausible, investment opportunity.

John Morris claims to have struck gold on Sardinia, the Mediterranean island better known for sunshine holidays, olive oil and cheese. To help fund the project he is bringing his company, Gold Mines of Sardinia, to the Alternative Investment Market next month, raising pounds 5.5m.

He is confident that investors will warm to the off-beat notion, even though the Sardinians are highly sceptical that the stuff actually exists. Standing on a Sardinian mountain top overlooking rolling hills, he says: "They don't believe it's here because they haven't seen it. People say that if it was here the Romans would have found it." In fact the gold was first discovered in 1988 by a group of university students who didn't make a bean.

Finding the mines let alone the gold is challenging enough. Earlier this week the site near Osilo in the northern part of the island was so shrouded in mist as to be completely invisible. Closer inspection proved impossible as the surrounding area has been reduced to a quagmire after weeks of heavy rain.

The site of the other mine, at Furtei in the sunny south near the capital Cagliari, is accessed via a rough switchback track. Though four open-pit mines are planned here and the first gold is scheduled to be poured in the autumn, it is currently nothing more than a rocky outcrop.

But there is gold here aplenty the geologists say. Production of 25,000 ounces of gold a year is the target with the ratio of waste to gold-bearing ore a healthy one.

A joint venture between a re-named Australian company and the Sardinian government, Gold Mines of Sardinia already has some blue chip backing. NM Rothschilds in Perth has a 17 per cent stake and is considering investing a further A$6m (pounds 3m). The company is also hoping to secure a pounds 3.5m EU grant as Sardinia is designated a disadvantaged area.

It sounds mouthwateringly good, as prospecting schemes always do. The institutions' reaction will be awaited with interest.