CGA Mining Limited - Quarterly Activities Report
/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR RELEASE TO US NEWS WIRE SERVICES/
CGA ANNOUNCES A FURTHER INCREASE IN PRODUCTION, UP BY ANOTHER 11% TO 40,535 OUNCES FOR THE MARCH QUARTER
MARCH QUARTERLY REPORT
ANNOUNCEMENT TO THE AUSTRALIAN SECURITIES EXCHANGE AND TORONTO STOCK EXCHANGE
PERTH, Western Australia, April 30 /CNW/ -
HIGHLIGHTS
- Production for the quarter increased by a further 11% to 40,535
ounces
- Mining rate increased by 54% in the quarter to 1,220,980t's mined
- Month of March saw a record 16,594 ounces produced at a cash cost of
US$454/oz
- Plant throughput continues to materially exceed design capacity.
- Plant availability improved further to 92.2%
- Successful lead nitrate trial in March shows significant improvement
in recovery (+5%) and resonance time
- New exploration permit EP-010-2010V (52.3 square kilometres) granted
- A US$10M exploration program of 55,000m of drilling and 15,000m of
trenching is underway
- Feasibility Study on the Segilola Gold Project progressing well
- Debt of US$38.5M repaid in the quarter
- Strong balance sheet with available cash on hand at 31 March of US
$75.3M.
MASBATE PROJECT UPDATE
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Cash
Oper-
Average Plant Total ating
Ore Grade Ore Head Reco- Avail- Prod- Costs
Mined Mined Milled Grade very ability uction (US$
(t) (g/t Au) (t) (g/t Au) (%) (%) (oz Au) /oz)
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March
Quarter 1,220,980 1.30 1,167,521 1.31 82.5 92.2 40,535 538
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December
Quarter 791,329 1.38 1,132,361 1.21 83.9 91.4 36,465 483
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The operation continued to improve during the quarter with a 54% increase in ore tonnes mined, a 3% increase in ore tonnes milled and an 8% increase in mill head grade. Plant throughput continued consistently above design capacity. The increase in grade reflected the drop in pioneering work and the increased ability for the mine to keep up with the plant, reducing the requirement for supplemental tonnages from lower grade stockpiles.
The improvement in the plant is however best demonstrated by the performance achieved in the month of March where 16,594 ounces were produced at a cash operating cost per ounce of $454.
Overall cash operating costs per tonne milled for the quarter was US$20.45 (US$18.19 Dec quarter) and were adversely affected by the shutdown costs associated with work completed on the crusher in January, the increase in grinding media being used and the relining work on the SAG mill in March.
Cash operating costs per ounce for the quarter were impacted by the planned shutdown costs for maintenance during the quarter and the temporary drop in recoveries due to higher than planned throughput. The use of lead nitrate was only introduced late in the quarter, so the positive impact on recoveries is only reflected to a very limited extent.
The average realised gold price during the quarter was US$1,010/oz (net of all hedges), with total proceeds from the sale of gold and silver of US$40.7M.
Safety
There were 0 Lost Time Injuries during the quarter. Training of staff concentrated on incident investigation, tag out procedures and risk assessment. The site Lost Time Injury frequency rate has reduced to 1.1, with the project now having achieved 175 LTI free days.
Mining and Geology
During the quarter, the total volume movement was 2,059,926 BCM (1,793,374 BCM in Dec quarter) contributing 1,220,980 tonnes (791,329 tonnes Dec quarter) of high grade ore and 593,160 tonnes (456,274 tonnes Dec quarter) of low grade ore being mined. The main production areas were HMB East, Montana, Main Vein, Colorado and Binstar pits. During the quarter access to the northern extremity of Colorado Pit and the uppermost benches of the 320 metre high hill was established for the earthmoving fleet. Mining has commenced on the northern end of Colorado and grade control of the remainder of the top benches of the deposit is well progressed.
With the commencement of mining in Colorado and Binstar and in preparation for the expansion of main vein, mining grade control requirements increased. An additional drill rig has commenced which has enabled the mine geology department to keep ahead of immediate production requirements. Furthermore a third multi-purpose rig has commenced to undertake waste dump sterilisation, resource step out and geotechnical drilling.
Milling
Mill throughput remained consistent with the previous quarter at 1,167,521 tonnes (1,132,361) whilst gold production improved by 11% to 40,535 ounces. The mill throughput was adversely impacted by a vibrating grizzly failure in January which masked the real improvements made through the circuit. In February an annualised throughput of 5.6 Mtpa was achieved. This achievement supports the planned ramp up in production to approximately 6.5 Mtpa on the expansion. It is clearly evident that the equipment installed in the plant is capable of materially higher throughputs than the 4mtpa nameplate capacity. A program of staged increases in throughput rates to test metallurgical impact and to debottleneck the circuit is underway.
Fresh ore was sourced from HMB East and Montana pits whilst oxide ore was mined from Main Vein and Binstar pits and the Dump 90 low grade dump.
Lead Nitrate Trial
A trial of lead nitrate addition to the leach circuit commenced in mid-March to test laboratory scale test work which indicates 5-7% higher and faster recovery of gold can be achieved for a given ore blend and throughput rate with the majority of this recovery coming from the first third of the leach train. As throughput rates in the plant are increased, this improvement in leach kinetics will be critical to maintain high gold recovery as residence time in the leach circuit reduces. The trial was very successful and confirmed the laboratory test work. Following the success of the trial, lead nitrate will continue to be added to the circuit and it is expected that improvements in recovery will be maintained in spite of reductions in residence time.
Community Relations
Implementation of the Social Development Management Plan agreed with the local communities and government continued to support and provide assistance in the areas of health, education, infrastructure and livelihood assistance. A review of performance against the 2009 plan was undertaken together with the presentation of the 2010 Plan to the communities, local and regional government representatives in a series of workshops in the impacted Barangays and Regional Government offices.
Exploration
Filminera Resources Corporation was granted a new 52.3 square kilometre exploration permit. The permit is contiguous to the tenements currently being mined by the Masbate Gold Project. A US$10M exploration program has also been announced and is already underway with 55,000m of drilling and 15,000m of trenching planned to be carried out over the next 12 months.
SEGILOLA GOLD PROJECT UPDATE
----------------------------
Work continued on the preparation of a Feasibility Study based on the resources as reported in the December 2009 report. The following sections of the report have either been completed or will be completed shortly.
Geology and Reserves
The assessment prepared by Geoscience Field Surveys Pty Ltd and Odessa Resources is complete.
Mineable Reserves (Probable)
The open pit design, scheduled capital and operating cost have been prepared by CGA using budget earthmoving unit rate estimates provided by two experienced international mining contractors based in Lagos, Nigeria. An independent geotechnical engineer has visited the site and examined the diamond core and in situ structure and recommended input data for the open pit design.
Metallurgical Testwork
A composited sample of drill core from areas within the orebody selectively chosen so as to represent the run of mine grade it was prepared and sent to Ammtec laboratories in Perth. The purpose of the recent analysis is to ensure that the sampling and testwork previously carried out on individual samples from various mineralised intersections within the mineralisation truly represents the orebody and the plant design specifications.
The recent results from Ammtec clearly demonstrate that the physical characteristics and leach time allowances in the process plant design are appropriate. The metallurgical program and process plant flowsheet have been designed and approved by R.W. Bourne and Associates, Metallurgical Consultants.
Process Plant Flowsheet and Design
This is complete for a standard primary crusher, single stage Semi Autogenous ("SAG") grinding circuit followed by carbon in leach ("CIL") and gold recovery circuit. The design, capital cost and operating cost estimates have been completed by Sedgman Engineering, a Process Engineering Consultant based in Perth, Western Australia.
Tailings Storage and Fresh ("TSF") Water Supply Storage Dam ("WSD")
The design is complete and D.C. Cooper Consultants is presently calculating the columns of earth to be moved and the capital and operating cost estimates.
Environmental Impact Assessment ("EIA")
Fugro Nigeria Limited has submitted a draft report for the internal review. The review is complete and Fugro are presently compiling the final report for submission to the regulatory authorities for approval.
CGA has appointed Mr. Gavin Cooper, an experienced geologist with in excess of 20 years working in Africa, Rwanda, Mali, Namibia, Senegal etc, to be the Regional Manager West Africa, to manage the development work for the Segilola Project.
CORPORATE
---------
As at 31 March 2010, group available cash was US$75.3M (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$4.1M. The outstanding project finance facility has now reduced to US$66.9M at 31 March 2010.
During the March quarter, the Company closed the placement of 39,100,000 shares at C$2.20 with clients of BMO Capital Markets and Haywood Securities Inc. The net funds received (after costs) was C$81.7M. The proceeds from the raising were used to repay early the $10M loan facility with Meridian Capital CIS Fund and Casten Holdings Limited and the $25M Senior Promissory Notes. The balance of the funds raised will be used to increase exploration activity at the Masbate Gold Project, including 55,000m of drilling and 15,000m of trenching in the next 12 months, progress the planned expansion of the plant at the Masbate Gold Project and general corporate purposes.
The Company issued a notice accelerating the expiry date of its outstanding Warrants to 5 February 2010. During the March quarter, 188,000 share options were exercised for gross proceeds of A$169,200 and 5,337,500 Warrants were exercised for gross proceeds of C$5,497,625.
At 31 March 2010, the Company had 12,002,000 options on issue. The total issued capital of the Company as at 31 March 2010 was 331,194,976 fully paid ordinary shares.
CGA entered into a strategic alliance with Sierra Mining Limited ("Sierra"), who hold prospective gold exploration interests in the Philippines. Projects include the property immediately adjacent to Medusa Mining Limited's (TSX:MLL) rich Co-0 gold mine (March quarter - average grade 20.6g/t and cash costs of US$180/oz) and other properties to the south of the world class King-king gold and copper deposit. This will leverage CGA's exploration expenditure and further capitalise on the success to date in the Philippines. CGA has agreed to subscribe for 11.8M new shares and 5.9M free attaching options, representing 10% of the issued capital of Sierra, investing A$708,000.
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, which is currently ramping up to full production, has a total indicated resource base of 4.55M ounces, total inferred resource base of 3.22M ounces with 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
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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 follow-up drilling plans at Segilola, the completion of a feasibility study, the Segilola mineral resource estimate, the acquisition of an additional 13% interest on the completion of a feasibility study, expansion of the resource at Segilola, anticipated timing for construction and production, 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.
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
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CGA Mining Limited
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ABN Quarter ended ("current quarter")
--------------------------------- ---------------------------------
88 009 153 128 30 April 2010
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Consolidated statement of cash flows
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Current Year to date
Cash flows related to operating activities quarter (9 months)
$US'000 $US'000
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1.1 Receipts from product sales(xx) 40,549 108,452
1.2 Payments for
(a) exploration and evaluation -1,301 -3,183
(b) development (including working capital
expenditure -2,993 -8,649
(c) production -21,808 -56,084
(d) administration -1,372 -4,037
1.3 Dividends received
1.4 Interest and other items of a similar
nature received 5 10
1.5 Interest and other costs of finance paid -1,995 -6,716
1.6 Income taxes paid
1.7 Other - annual insurance and other taxes -2,817 -14,422
- inventory and creditors movements -663 -4,504
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Net Operating Cash Flows 7,605 10,867
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Cash flows related to investing activities
1.8 Payment for purchases of:
(a) prospects
(b) equity investments
(c) other fixed assets -6 -199
1.9 Proceeds from sale of:
(a) prospects
(b) equity investments
(c) other fixed assets
1.10 Loans to other entities -1,554 -10,835
1.11 Loans repaid by other entities
1.12 Other
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Net investing cash flows -1,560 -11,034
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1.13 Total operating and investing cash flows
(carried forward)
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1.13 Total operating and investing cash flows
(brought forward) 6,045 -167
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Cash flows related to financing activities
1.14 Proceeds from issues of shares, options,
etc. 86,729 110,814
1.15 Proceeds from sale of forfeited shares
1.16 Proceeds from borrowings
1.17 Repayment of borrowings -38,456 -45,143
1.18 Dividends paid
1.19 Other (capital raising costs) -4,465 -5,687
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Net financing cash flows 43,808 59,984
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Net increase (decrease) in cash held 49,853 59,817
1.20 Cash at beginning of quarter/year to date 32,036 22,587
1.21 Exchange rate adjustments to item 1.20 2,204 1,689
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1.22 Cash at end of quarter* 84,093 84,093
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* an additional US$2,931,247 in cash is held by Filminera Resources
Corporation
(xx)sales revenue is offset against refining and transport charges of
$220k 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
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1.23 Aggregate amount of payments to the parties
included in item 1.2 276
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1.24 Aggregate amount of loans to the parties included
in item 1.10 -
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1.25 Explanation necessary for an understanding of the transactions
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Payment of directors' fees, salaries, taxes, and superannuation.
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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
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n/a
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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
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n/a
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Financing facilities available
Add notes as necessary for an understanding of the position.
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Amount
available Amount used
$US'000 $US'000
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3.1 Loan facilities - 66,919
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3.2 Credit standby arrangements - -
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Estimated cash outflows for next quarter
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$US'000
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4.1 Exploration and evaluation 978
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4.2 Development - capex, excluding operational expenditure. -
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Total 978
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Reconciliation of cash
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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
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5.1 Cash on hand and at bank 83,863 31,490
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5.2 Deposits at call - -
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5.3 Bank overdraft - -
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5.4 Other (AUD account) 230 546
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Total: cash at end of quarter (item 1.22)* 84,093 32,036
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* an additional US$2,931,247 in cash is held by Filminera Resources
Corporation
Changes in interests in mining tenements
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Nature of Interest at Interest at
Tenement interest beginning end of
reference (note (2)) of quarter quarter
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6.1 Interests in
mining tenements
relinquished,
reduced or
lapsed n/a n/a n/a n/a
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6.2 Interests in
mining tenements
acquired or
increased n/a n/a n/a n/a
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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)
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7.1 Preference
+securities
(description)
---------------------------------------------------
7.2 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns
of capital,
buy-backs,
redemptions
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7.3 +Ordinary
securities 331,194,976 331,194,976
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7.4 Changes during
quarter
(a) Increases
through issues:
Private placement 39,100,000 39,100,100 C$2.20 C$2.20
Option exercises 188,000 188,000 A$0.90 A$0.90
Warrant exercises 5,337,500 5,337,500 C$1.03 C$1.03
(b) Decreases
through returns
of capital,
buy-backs
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7.5 +Convertible
debt securities
(description)
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7.6 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through
securities
matured,
converted
Promissory notes 25,000 - US$1,000 US$1,000
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7.7 Options and Exercise Expiry
Warrants price date
(description
and conversion
factor)
---------------------------------------------------
7.8 Issued during
quarter-options
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7.9 Exercised during
quarter
Options 188,000 188,000 A$0.90 A$0.90
Warrants 5,337,500 5,337,500 C$1.03 C$1.03
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7.10 Expired during
quarter - -
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7.11 Debentures
(totals only) - -
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7.12 Unsecured notes
(totals only) - -
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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 April 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: 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: (505) 344-2822, Fax: (505) 344-2922, Email: [email protected]
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