Lone prospector's Falklands gold find leads to AIM float

A company is floating on AIM this week that claims it has found gold in the Falkland Islands.

A company is floating on AIM this week that claims it has found gold in the Falkland Islands.

Falkland Gold & Minerals is coming to market to raise £8m, which it hopes will be enough to develop potentially lucrative deposits of gold that have been discovered after five years of prospecting in the disputed South Atlantic territory.

If successful, the group will either raise more money to mine the deposits or sell them on to a larger group to exploit.

Most of the prospecting so far has been conducted single-handed by an Australian mining engineer, Derek Reeves.

He has travelled around the British territory in a Land Rover, prospecting in the old-fashioned way by panning streams to find gold deposits, as well as digging trenches. He even took the Governor of the Falklands, Howard Pearce, with him on a trip. Some of the gold they retrieved was incorporated in the wedding rings made for Mr Pearce and his wife when they married earlier this year.

Because the islands are largely covered in thick peat, the prospectors had to use aircraft for the next level of proving deposits, a geological survey.

The survey showed up to 23 potential sites to be worth exploring. The money raised will allow Falkland Gold to drill cores on these sites.

The group's chairman, Richard Linnell, a former BHP Billiton executive, says the group has evidence that, 200 million years ago, before the Atlantic opened up, the islands were squashed against what is now South Africa in the Gondwana super continent. He believes the gold is therefore part of the major gold-producing geological plates in South Africa.

Falkland Gold is being spun off from Falkland Island Holdings, the company created after the Falklands War in 1982 to exploit the commercial potential of the islands. It has already spun off an oil and gas business, which is listed on AIM.

Other investors include RAB Capital, a London-based investment group, and Cambridge Mineral Resources, which carried out the prospecting. The operation has a licence to exploit the territory's mineral wealth until 2009; it is confident of having the licence extended.

Argentina has never given up its claims of sovereignty over the islands, which it calls the Malvinas. Falkland Gold regularly receives letters of complaint from Buenos Aires, but it refers them to the Foreign Office, which has been happy to give the Argentine government the brush-off.