Hip hip hooray! New and significant finds are still possible! The news from AngloGold Ashanti’s Columbian project has finally been officially confirmed. And this gold producing major could now be sitting on one of the ten biggest gold reserves in the world.

Okay, okay, so it has been described as mining’s worst kept secret. Columbia’s President Alvaro Uribe spilt the beans of a major gold find last December. But AngloGold kept mum in spite of widespread media speculation that it was the lucky company.

We knew for sure back in February that it was indeed AngloGold, and that the resource was not only real but significant. One of Isabel’s insiders confirmed that a fair few ounces of the yellow stuff had been struck.

And he wasn’t wrong.

Phew! A significant resource!

According to AngloGold, there is a 12.9m oz glittering gold resource at its wholly owned Columbian project, La Colosa.

And there is still room to increase the resource as drilling to date has only tested a relatively small area.

“Three quality targets require follow-up,” says Anglogold.

So this is only an “inferred” resource, the earliest stage of quantifiable exploration. But it is JORC compliant, so has met Aussie set standards for reporting.

Better still, La Colosa is not Anglogold’s only Columbian project. The Gramelote deposit, discovered in 2006, hosts an inferred resource of 2.12m oz. For now it seems that Gramelote will be put on the backburner.

In fact, the funding and pre-feasibility study of Gramelote will be done by joint venture partner B2Gold. AngloGold has handed over a 51% interest to this Vancouver-based exploration company.

So, quite clearly it believes that La Colosa should take centre stage. After all, it owns a 100% stake in the project, and La Colosa is a much bigger resource! So it is pushing ahead — the plan is to take La Colosa to pre-feasibility by the third quarter of this year.

A frontier worth braving!

AngloGold was the first company to brave Columbia back in 2003, when nobody wanted to touch it.

Columbia is a highly stratified society, with Spanish descendants enjoying much greater wealth than much of local population. Not unlike the British and Dutch in South Africa!

And as in South Africa, crime is a real issue in Columbia. Aside from politically motivated violence, drug-related crime is a major problem — it is the most common cause of death after cancer!

No wonder then that many investors have steered clear! And no wonder AngloGold, with its South African roots, feels at home! It is quite used to operating in challenging environments.

But now AngloGold has some 37,500 sq km of land. The company seems reasonably confident in the current Columbian government, which it says is effective.

It also feels general conditions are good. President Uribe has taken a tough line with both left-wing guerrillas and right-wing paramilitaries. Fair play to him — murders and kidnappings have fallen as a result.

Judging by La Colosa and Gramelote, AngloGold’s foray into Columbia was a risk worth taking. Clearly, it is good news for Columbia too. This could double Columbia’s gold production by 2011!

The safe haven of the big boys

It is this sort of news that reminds us why mining majors are a long-term safe bet. New gold finds are increasingly rare. And investors in these jittery times have become a little jaded. Some are even wondering whether there is, in fact, any gold left underground.

As we’ve mentioned in recent diaries, junior explorers are struggling to raise capital. Understandably, many investors would rather bet on bigger players. They might not yield the massive upside that could be had from junior explorers. But it is possible to get the best of both worlds.

And clearly AngloGold has the experience, and the wisdom that comes with that, to make a project like La Colosa economically viable. Of course we know that this is still very early days— it is going to be six years at least before we see an AngloGold Columbian gold bar.

But even if that never materialises, at least we know Anglo is producing elsewhere. In the first quarter of 2008, output was 1.2m oz, with cash costs of $430 per oz.

The other big news is that AngloGold now has a clear strategy for reducing its hedge book, with plans to raise ZAR11.9bn from shareholders. It is a decision that must still be approved at an extraordinary general meeting next week. Since Aussie chief Mark Cutifani is a firm believer in the outlook for gold, he’ll be doing his best to convince shareholders this is the way forward.

Clearly the market thinks it is a good idea. The share price of what one analyst calls “the cheapest gold stock in the world” rose nearly 10% after the news broke. Cutifani too calls AngloGold “the most undervalued story in the gold industry”.

But perhaps the tide is finally turning.

Keeping mining

Erin and IsabelSource: When AngloGold’s Risk Paid Off