CGA announces a further increase in production for the quarter and a maiden
annual production in excess of 150,000 ounces at cash costs of US$548
/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR RELEASE TO US NEWS WIRE SERVICES/
JUNE QUARTERLY REPORT
ANNOUNCEMENT TO THE AUSTRALIAN SECURITIES EXCHANGE AND
TORONTO STOCK EXCHANGE
29 JULY 2010
PERTH, Western Australia, July 29 /CNW/ -
HIGHLIGHTS
- Production for the quarter continued to climb, increasing a further
7% to 43,390 ounces
- Maiden annual production of 150,143 ounces at cash costs of
US$548 per ounce
- A new monthly record production of 17,707 ounces was recorded in May
- Throughput for the quarter increased by 15% to 1,347,023 tonnes
- Plant throughput in May achieved an annualised rate equivalent to
6.23 Mtpa
- Exploration drilling commenced during the quarter with significant
exploration results including:
Hole BQRC001, 5m @17.95g/t Au including 2m @ 41.39g/t
Hole BQRC004, 14m @ 3.48 g/t Au including 7m @ 6.08 g/t
Hole BNRC012, 23m @ 1.40 g/t Au including 2m @5.06 g/t
Hole BNRC032, [email protected] g/t Au including 3m @ 23.77 g/t
- Ratel Gold Limited spin off of the Segilola Gold Project and Mkushi
Copper Project announced and approved by shareholders during the
quarter
- Debt and interest of US$4.2M repaid in the quarter
- Strong balance sheet with available cash on hand at 30 June of
US$75.4M
MASBATE PROJECT UPDATE
-----------------------
-------------------------------------------------------------------------
Cash
Oper-
Average Plant Total ating
Ore Grade Ore Head Reco- Avail- Prod- Costs
Mined Mined Milled Grade very ability uction (US$
(t) (g/t Au) (t) (g/t Au) (%) (%) (oz Au) /oz)
-------------------------------------------------------------------------
June
Quarter 1,227,639 1.24 1,347,023 1.19 84.2 87.4 43,390 596
-------------------------------------------------------------------------
March
Quarter 1,220,980 1.30 1,167,521 1.31 82.5 92.2 40,535 538
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The operation continued to improve during the quarter with a 15% increase in ore tonnes milled and a 7% increase in gold produced. Plant throughput ramped up aggressively in the quarter. The drop in grade reflected the addition of lower grade ore to match the ramp up in milled tonnes. Mining continued to open up cut backs in preparation for sustained operations at the higher throughputs.
The improvement in the plant is best demonstrated by the performance achieved in the month of May where 17,707 ounces were produced at a mill throughput rate equivalent to 6.23 tpa and plant availability of 94.7%.
Overall cash operating costs per tonne milled for the quarter were US$18.83 (US$20.45 March quarter), unadjusted for stockpile movements and waste deferral. This was achieved inspite of the SAG mill bearing issues in April, the addition of lead nitrate (which has lead to a material increase in recoveries) and a SAG and Ball mill reline during the quarter.
Cash operating costs per ounce for the quarter of $596.23 were directly impacted by the drop off in grade as a result of continued work on setting up cut backs.
The average realised gold price during the quarter was US$1,108.67/oz (net of all hedges), with total proceeds from the sale of gold and silver of US$47.35M.
Safety
There was 1 Lost Time Injury ("LTI") during the quarter, when an electrician sustained a back injury due to a fall from a light pole. Training of staff continued to concentrate on incident investigation, tag out procedures and risk assessment across the site. The site LTI frequency rate is 1.0, with the project having 41 LTI free days at the end of the quarter.
Mining and Geology
The total volume movement was 2,204,147 BCM (2,059,926 BCM March quarter) contributing 1,227,639 tonnes (1,220,980 tonnes march quarter) of high grade ore and 864,452 tonnes (593,160 tonnes March quarter) of low grade ore. The main production areas were HMB East, Montana, Main Vein, Colorado and Binstar pits. Both Stage 1 & 2 in Colorado progressed well. HMB East is ahead of schedule and the final stage (3) is expected to start early in the next quarter. The Montana pit was completed except for a small "good-bye" cut on the ramp.
Geotechnical and resource drilling commenced during the period.
Milling
Mill throughput increased by 15% from the previous quarter to 1,347,023 tonnes (1,167,521 tonnes March quarter) whilst gold production improved by 7% to 43,390 ounces. This is a particularly good result considering the issues encountered with the SAG Mill trunnion bearing in April. These were addressed and in May an annualised throughput rate of 6.23 Mtpa was achieved. This was a major achievement in the planned ramp up in production to 6.5 Mtpa and occurred without targeted expansion improvements being undertaken to date. Whilst oxide ore was treated during this quarter it provided the information required to successfully debottleneck the plant in preparation for the treatment of competent ore.
Ore sources for the quarter were HMB East and Montana pits (transition & fresh) whilst oxide ore was mined from Main Vein Colorado and Binstar pits and the Dump 90 low grade dump.
Lead Nitrate
The use of lead nitrate continues to provide significant benefits to the operation. April production was treated mostly without lead nitrate addition and achieved an average recovery of 79.9%. The subsequent months of May and June averaged 85.7% recovery at a significantly higher feed rate (+150tph) by using lead nitrate consistently.
Monitoring of the circuit performance indicated that residence time through the CIL circuit with lead nitrate accelerating the leach kinetics, was very healthy whilst April conditions without its use were under significant pressure resulting in recoveries dropping off.
Community Relations
Continued implementation of the Social Development Management Plan ("SDMP") agreed with the local communities and government providing support and assistance in the key areas of health, education, infrastructure and livelihood assistance. The 2010 SDMP is well underway with projects agreed with the stakeholders from the eight Impact Barangays.
Exploration
Exploration activities commenced this quarter with a planned annual budget of US$10m. The drilling programme has initially focussed on the Blue Quartz (660m) and Boston Porphyry prospects (3,600m). A drill program (18holes) has also been planned and pads prepared for the Capsay (Old Lady) prospect.
For a summary of the drilling results, refer to the announcements on 1 July and 14 July, with some key intercepts set out below:
- Hole BQRC001, 5m @ 17.95g/t Au including 2m @ 41.39g/t
- Hole BQRC004, 14m @ 3.48 g/t Au including 7m @ 6.08 g/t
- Hole BNRC012, 23m @ 1.40 g/t Au including 2m @5.06 g/t
- Hole BNRC032, 7m @ 10.68 g/t Au including 3m @ 23.77 g/t
The above are near mine targets and outside the current inferred and indicated resource envelopes and are considered very encouraging for the delineation of further reserves close to current pits.
SPIN OFF OF AFRICAN ASSETS
--------------------------
The Board of CGA announced on 1 June 2010, a proposed spin off of the interests in the Segilola Gold Project and Mkushi Copper Projects by way of an initial public offering ("IPO") of Ratel Gold Limited ("Ratel"). The proposed spin off was structured to provide CGA shareholders with an opportunity to realise enhanced value for the African projects, which are at the exploration stage and provides an opportunity to better manage exposure and investment in the assets and jurisdictions.
CGA will retain a 20% interest in Ratel and a US$14m offer of new shares has been made to CGA shareholders (US$12m on a priority basis), new institutional clients of Haywood Securities Inc (the broker to the issue) and those on the President's List. Please refer to the earlier announcement on 1 June for further details. The planned IPO of Ratel is anticipated to be completed in early August 2010 and was approved by shareholders on 2 July 2010.
SEGILOLA GOLD PROJECT UPDATE
----------------------------
During the quarter all the technical inputs for the study required under the Joint Venture for the purposes of the exercise of our Option 3 (an additional 13% interest and to take our interest to 51%) were completed. We are currently in discussions with the appropriate Government agencies in an effort to optimise and clarify the applicable / appropriate tax regime and identify the optimal corporate structure. Segilola Gold Limited ("SGL") and Tropical Mines Limited have appointed Price Waterhouse Coopers to assist with the discussions with the Government.
Mining License
The designs for the open pit, waste dumps, process plant, fresh water dam, tailings storage facility have been included in a project site layout. The total area required is greater that the area of the existing Mining License ML41. An application for enlargement of the ML41 area has been submitted and is under review.
Environmental
An Environmental Impact Assessment and Management Plan has been submitted to the Ministry of Environment for review prior to the obligatory public review.
Ongoing Work
A preliminary program for additional drilling has been formulated to test the lateral and depth extent of the interpreted plunge to the south of the known limits of mineralisation. In addition, SGL will drill test beneath a high grade geochemical anomaly determined to exist to the north of the known zone of mineralisation.
MKUSHI COPPER PROJECT UPDATE
----------------------------
A conceptual study for a modular type processing facility has been undertaken by Bateman Engineering. This may lead to improved and revised estimates on both the capital and operating parameters/costs, the details of which are still currently under review.
CORPORATE
---------
As at 30 June 2010, group available cash was US$75.4M (including the cash reserves of FRC) after having paid the fourth interest and principal repayment on the BNP arranged project finance facility for the Masbate Gold Project of US$4.2M. The outstanding project finance facility has now reduced to US$63.4M at 30 June 2010.
At 30 June 2010, the Company had 11,902,000 options on issue. The total issued capital of the Company as at 30 June 2010 was 331,294,976 fully paid ordinary shares.
ABOUT CGA MINING LIMITED
------------------------
CGA is listed on both the Toronto Stock Exchange and the Australian Securities Exchange. The Masbate Gold Project is the largest gold project in the Philippines and was successfully developed with first gold poured on 12 May 2009. The project has a total indicated resource base of 4.55M ounces, total inferred resource base of 3.22M ounces and a probable reserve of 3.03M ounces of gold. At steady state operations the project is forecast to produce over 200,000 ounces per annum.
The 4Mtpa plant was constructed by Leighton Contractors Asia Limited ("Leighton") without one lost time injury. The mining contract for the Masbate Gold Project has been awarded to Leighton, the largest mining contractor in the world. CGA is completing a scoping study for the expansion of the plant throughput at Masbate.
CGA has a disciplined acquisition program focused on acquiring new gold projects with a substantial initial resource with the capacity to grow materially and where the development and operational experience of CGA can be applied to enhance shareholder value.
NATIONAL INSTRUMENT 43-101 AND JORC COMPLIANCE
----------------------------------------------
Mr Geoff.G.Jones, F.Aus.I.M.M.CP Mng, CGA's Consulting Engineer, is acting as the Qualified Person in compliance with NI 43-101 and JORC reporting requirements with respect to this announcement. He has prepared and or supervised the preparation of the scientific or technical information in this announcement and confirms compliance with NI43-101 and JORC requirements.
Further information relating to the Masbate Project is included in the technical report entitled Technical Report on the Mineral Resources of the Masbate Deposit, Masbate Province, Republic of the Philippines for CGA Mining Limited prepared by Mining Associates Pty Ltd and available on SEDAR at www.sedar.com, lodged 8 July 2008.
Andrew James Vigar of Mining Associates Pty Ltd, a qualified person, has verified the resource statement for the Masbate Project as disclosed in this announcement, including sampling, analytical and test data underlying the estimate. Verification of the data included numerous site visits, database validation of historical drill results and review of sampling and assaying protocols. The qualified person was satisfied with the verification process.
A NI 43-101 compliant report has been lodged on www.sedar.com verifying and supporting the new reserve statement made for the Masbate Project. Mr Daniel Tuffin, previously of Lower Quartile Solution Pty Ltd, a qualified person, has verified the reserve statement for the Masbate Project as disclosed in this announcement, including sampling, analytical and test data underlying the estimate. Verification of the data included database validation of historical drill results and review of sampling and assaying protocols. The qualified person was satisfied with the verification process.
Mr. Alfred John Gillman of Odessa Resources Pty Ltd, an independent qualified person experienced in the style of mineralisation at Segilola, has completed the resource statement for the Segilola Project as disclosed in this announcement, including verification of the sampling, analytical and test data underlying the estimate. Verification also included a site visit, database validation of historical drill results and a review of sampling and assaying protocols. The qualified person was satisfied with all of the protocols used during the drilling, sampling and in the Segilola resource estimate compilation and computation.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
----------------------------------------------------
This announcement includes certain "forward-looking statements" within the meaning of Canadian securities legislation. All statements, other than statements of historical fact, included herein including, without limitation, statements regarding the reserves and resources at the Masbate Gold Project and other milestones related to the Masbate Gold Project and other projects, production estimates and CGA's future operating or financial performance, are forward-looking statements. Forward-looking statements involve various risks and uncertainties and are based on certain factors and assumptions. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from CGA's expectations include uncertainties related to fluctuations in gold and other commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; the need for cooperation of government agencies in the development of CGA's mineral projects; the need to obtain additional financing to develop CGA's mineral projects; the possibility of delay in development programs or in construction projects and uncertainty of meeting anticipated program milestones for CGA's mineral projects ; and other risks and uncertainties disclosed under the heading "Risk Factors" in CGA's Annual Information Form for the year ended 30 June 2009 filed with the Canadian securities regulatory authorities on the SEDAR website at www.sedar.com.
Rule 5.3
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
-------------------------------------------------------------------------
CGA Mining Limited
-------------------------------------------------------------------------
ABN Quarter ended ("current quarter")
--------------------------------- ---------------------------------
88 009 153 128 30 June 2010
--------------------------------- ---------------------------------
Consolidated statement of cash flows
-------------------------
Cash flows related to operating activities Current Year to date
quarter (9 months)
$US'000 $US'000
-------------------------
1.1 Receipts from product sales(xx) 47,380 155,832
1.2 Payments for
(a) exploration and evaluation (1,825) (5,008)
(b) development (including working capital
expenditure) (3,470) (12,119)
(c) production
(d) administration (including costs (25,476) (81,560)
associated with the Ratel spin off) (1,617) (5,654)
1.3 Dividends received - -
1.4 Interest and other items of a similar
nature received 50 60
1.5 Interest and other costs of finance paid (1,219) (7,935)
1.6 Income taxes paid - -
1.7 Other - annual insurance and other taxes (2,596) (17,018)
- inventory and creditors movements (1,373) (5,877)
-------------------------
Net Operating Cash Flows 9,854 20,721
-------------------------------------------------------------------------
Cash flows related to investing activities
1.8 Payment for purchases of:
(a) prospects
(b) equity investments (844) (844)
(c) other fixed assets (368) (567)
1.9 Proceeds from sale of:
(a) prospects
(b) equity investments
(c) other fixed assets
1.10 Loans to other entities (1,625) (12,460)
1.11 Loans repaid by other entities - -
1.12 Other - -
-------------------------
Net investing cash flows (2,837) (13,871)
-------------------------
1.13 Total operating and investing cash flows
(carried forward)
-------------------------------------------------------------------------
1.13 Total operating and investing cash flows
(brought forward) 7,017 6,850
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Cash flows related to financing activities
1.14 Proceeds from issues of shares, options,
etc. 469 111,283
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings - -
1.17 Repayment of borrowings (3,532) (48,675)
1.18 Dividends paid - -
1.19 Other (capital raising costs) (3) (5,690)
-------------------------
Net financing cash flows (3,066) 56,918
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Net increase (decrease) in cash held 3,951 63,768
1.20 Cash at beginning of quarter/year to date 84,093 22,587
1.21 Exchange rate adjustments to item 1.20 143 1,689
-------------------------
1.22 Cash at end of quarter* 88,187 88,187
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* an additional US$6.048M in cash is held by Filminera Resources
Corporation
(xx) sales revenue is offset against refining and transport charges of
$165k for the quarter
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
-----------------
Current quarter
$US'000
-----------------
1.23 Aggregate amount of payments to the parties
included in item 1.2 370
-----------------
1.24 Aggregate amount of loans to the parties
included in item 1.10 0
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1.25 Explanation necessary for an understanding of the transactions
-------------------------------------------------------------------
Payment of directors' fees, salaries, taxes, and superannuation.
-------------------------------------------------------------------
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a
material effect on consolidated assets and liabilities but did not
involve cash flows
-------------------------------------------------------------------
n/a
-------------------------------------------------------------------
2.2 Details of outlays made by other entities to establish or increase
their share in projects in which the reporting entity has an
interest
-------------------------------------------------------------------
n/a
-------------------------------------------------------------------
Financing facilities available
Add notes as necessary for an understanding of the position.
-------------------------
Amount
available Amount used
$US'000 $US'000
-------------------------
3.1 Loan facilities - 63,387
-------------------------
3.2 Credit standby arrangements - -
-------------------------------------------------------------------------
Estimated cash outflows for next quarter
-------------
$US'000
-------------
4.1 Exploration and evaluation 2,000
-------------
4.2 Development - capex, excluding operational
expenditure.
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Total
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Reconciliation of cash
-------------------------
Reconciliation of cash at the end of the
quarter (as shown in the consolidated Current Previous
statement of cash flows) to the related items quarter quarter
in the accounts is as follows. $US'000 $US'000
-------------------------------------------------------------------------
5.1 Cash on hand and at bank 87,365 83,863
-------------------------
5.2 Deposits at call - -
-------------------------
5.3 Bank overdraft - -
-------------------------
5.4 Other (AUD account) 822 230
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Total: cash at end of quarter (item
1.22)* 88,187 84,093
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* an additional US$6.048M in cash is held by Filminera Resources
Corporation
Changes in interests in mining tenements
---------------------------------------------------
Nature of Interest at Interest at
Tenement interest beginning end of
reference (note (2)) of quarter quarter
---------------------------------------------------
6.1 Interests in
mining tenements
relinquished,
reduced or
lapsed n/a n/a n/a n/a
---------------------------------------------------
6.2 Interests in
mining tenements
acquired or
increased n/a n/a n/a n/a
---------------------------------------------------
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion
rights together with prices and dates.
---------------------------------------------------
Issue price Amount paid
per up per
Total Number security security
number quoted (see note 3) (see note 3)
-------------------------------------------------------------------------
7.1 Preference
+securities
(description)
---------------------------------------------------
7.2 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns
of capital,
buy-backs,
redemptions
-------------------------------------------------------------------------
7.3 +Ordinary
securities 331,294,976 331,294,976
---------------------------------------------------
7.4 Changes during
quarter
(a) Increases
through issues:
Private
placement
Option exercises 100,000 100,000 A$0.90 A$0.90
Warrant
exercises
(b) Decreases
through returns
of capital,
buy-backs
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7.5 +Convertible
debt securities
(description)
---------------------------------------------------
7.6 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through
securities
matured,
converted
Promissory notes
-------------------------------------------------------------------------
7.7 Options and Exercise Expiry
Warrants price date
(description
and conversion
factor)
---------------------------------------------------
7.8 Issued during
quarter-options
---------------------------------------------------
7.9 Exercised during
quarter
Options 100,000 100,000 A$0.90 A$0.90
---------------------------------------------------
7.10 Expired during
quarter - -
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7.11 Debentures
(totals only) - -
-----------------------------------------------
7.12 Unsecured notes
(totals only) - -
-------------------------
Compliance statement
1 This statement has been prepared under accounting policies which
comply with accounting standards as defined in the Corporations Act or
other standards acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters
disclosed.
Sign here: (signed) Date: ...30 July 2010................
(Company secretary)
Print name: .Hannah Hudson................
Notes
1 The quarterly report provides a basis for informing the market how
the entity's activities have been financed for the past quarter and the
effect on its cash position. An entity wanting to disclose additional
information is encouraged to do so, in a note or notes attached to this
report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in
respect of interests in mining tenements acquired, exercised or lapsed
during the reporting period. If the entity is involved in a joint venture
agreement and there are conditions precedent which will change its
percentage interest in a mining tenement, it should disclose the change
of percentage interest and conditions precedent in the list required for
items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is
not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for
Extractive Industries and AASB 1026: Statement of Cash Flows apply to
this report.
5 Accounting Standards ASX will accept, for example, the use of
International Accounting Standards for foreign entities. If the standards
used do not address a topic, the Australian standard on that topic (if
any) must be complied with.
For further information: ENQUIRIES: Australian Contact, President & CEO - Michael Carrick, Tel: +61 8 9263 4000, Fax: +61 8 9263 4020, Email: [email protected]; US Contact, Independent Chairman - Mark Savage, Tel: +1 505 344 2822, Fax: +1 505 344 2922, Email: [email protected]
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