2Q Update on Gold Operations
HIGHLIGHTS
- 9,896 ounces of gold produced for the second quarter of 2016 (Q1 2016 - 9,771 ounces).
- Mine production totalled 33,606 tonnes.
- 25,198 tonnes at a grade of 10.48 grammes per tonne (g/t) of gold from Palito.
- 8,408 tonnes at 6.81 g/t of gold from Sao Chico.
- 39,402 tonnes of ore processed through the plant for the combined mining operations.
- 2,940 metres of horizontal mine development completed in the quarter with 1,910 metres completed at Palito and 1,031 metres at Sao Chico.
- Installation of the third ball mill was completed during the quarter, with a second flotation line and enhancements in the carbon in pulp ("CIP") plant close to completion. The carbon regeneration kiln acquired earlier in the year is now being installed and will be commissioned during the current quarter. The kiln will regenerate 'fouled' carbon and enhance gold recoveries.
- Daily plant throughput can now be increased from 380-400 tonnes per day (tpd) to over 500 tpd, which is in excess of mined production allowing surface stocks to be depleted in the second half of the year.
- Sao Chico is now being developed on the 156mRL, 140mRL, 128mRL and 116mRL levels, with production ore being mined from the 156mRL level. The ramp continues to be deepened from levels 116mRL to 100mRL, the next planned development level.
- During the second quarter, underground exploration drilling has commenced at Sao Chico. A programme of approximately 6,000 metres is planned to test the down dip continuity of the central ore zone. The first hole, completed within the last seven days, reported an intersection of 46.2 g/t of gold over a drilled width of 2.32 metre, approximately 240 metres from surface and 100 metres down-dip from the current lowest developed level.
- At the end of the second quarter, the combined surface stockpiles at Palito and Sao Chico totalled 12,000 tonnes at an average grade of 5.0 g/t of gold.
- The Company remains confident of achieving its production forecast of 37,000 ounces of gold for the year.
Gold production for the second quarter came from the processing of 39,402 tonnes of hard rock ROM ore from the Palito and Sao Chico Mines with an average grade of 8.17 g/t of gold. The total mined ore for the same period was 33,606 tonnes with an average grade of 9.56 g/t of gold. In addition to the ROM ore, an additional 6,354 tonnes of flotation tailings with a grade of 2.80 g/t of gold was processed through the cyanidation plant.
At 30 June 2016, there were coarse ore stocks of approximately 12,000 tonnes with an average grade of 5.0 g/t of gold, and approximately 25,000 tonnes of flotation tails with an average grade of 2.5 g/t of gold. The plant expansion, with mill number 3 now operational, is virtually complete and will provide sufficient incremental capacity to process most of this stockpiled material during the remainder of 2016.
Approximately 1,900 metres of horizontal development has been completed during the quarter at the Palito Mine, of which 943 metres is represented by ore development, with the balance being on the development of ramps, cross cuts and stope preparation.
At the Sao Chico Mine a total of 1,031 metres of horizontal development was completed, of which 598 metres represents ore development, with much of the balance being ramp development and cross cuts reflecting the on-going deepening of the mine. Mine production from Sao Chico was 8,408 tonnes of ore extracted, at a grade of 6.81 g/t of gold. Most of this ore has been generated from development mining, however there will be a greater contribution of ore coming from production areas during the second half of the year.
2016 Guidance
The Company expects to produce 28,000 ounces of gold during 2016 from the processing of Palito ROM and the Palito stockpiles. With the Sao Chico Mine now under development, the Company also anticipates production of 9,000 ounces of gold from ore mined at Sao Chico, and as a result, with close to 20,000 ounces of gold production by mid-year, the Company remains confident of achieving its production forecast of 37,000 ounces of gold for the year. Whilst we have forecast an All-In Sustaining Cost of between US$840 to US$870 per ounce, this guidance was predicated on a significantly weaker Brazilian Real at the beginning of the year. The Brazilian Real has strengthened against the US Dollar by approximately 20% since the start of 2016, much of which has occurred in this last quarter, and this will impact on our reported costs in US Dollars. Commentators have been predicting a weakening of the Brazilian Real in the second half of 2016 and we will continually be reviewing our cost guidance to reflect the potential effects of changing exchange rates.
| SUMMARY PRODUCTION STATISTICS FOR THE SIX MONTHS ENDED 30 JUNE 2016 (Palito & Sao Chico) | ||||||
| Quarter 1 | Quarter 2 | H1 | H1 | |||
| 2016 | 2016 | 2016 | 2015 | |||
| Horizontal development - Palito | Metres | 1,900 | 1,910 | 3,810 | 3,404 | |
| Horizontal development - Sao Chico | Metres | 1,025 | 1,031 | 2,056 | 1,058 | |
| Horizontal development - Total | Metres | 2,925 | 2,941 | 5,866 | 4,462 | |
| Mined ore - Palito | Tonnes | 26,752 | 25,198 | 51,950 | 54,864 | |
| Gold grade (g/t) | 11.84 | 10.48 | 11.18 | 10.17 | ||
| Mined ore - Sao Chico | Tonnes | 10,794 | 8,408 | 19,202 | 9,128 | |
| Gold grade (g/t) | 9.00 | 6.81 | 8.04 | 8.47 | ||
| Mined ore - Total | Tonnes | 37,546 | 33,606 | 71,152 | 63,992 | |
| Gold grade (g/t) | 11.02 | 9.56 | 10.33 | 9.85 | ||
| Milled ore | Tonnes | 36,615 | 39,402 | 76,017 | 63,662 | |
| Gold grade (g/t) | 8.58 | 8.17 | 8.37 | 8.36 | ||
| Gold production (1) | Ounces | 9,771 | 9,896 | 19,667 | 15,626 | |
- Gold production figures are subject to amendment pending final agreed assays of the gold content of the copper/gold concentrate and the gold bullion when smelting and refining processes are completed.
- Gold production totals for 2016 include treatment of 11.053 tonnes of flotation tails
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
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