Cost increases overshadow first mining at WA gold project

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 01 Dec 2011   Posted by admin

Gold miner Ramelius Resources has started mining at its Mt Magnet gold mining project in WA, according to a statement released by the Adelaide-based company on October 4. The news was overshadowed,
however, by the company’s revelation that it had experienced a $1.5 million cost blowout on refurbishment works on the mine’s treatment plant. The works, due for completion in November, were originally
budgeted at $14 million. Ramelius updated the estimate, reporting that it anticipated the cost of the refurbishment would increase to $15.5 million, due to a decision to replace the existing cyanide facility and
additional costs of refurbishment works on items that were not accessible during an original engineering assessment.
At the start of September, Ramelius reported a mineral resource estimate for Mt Magnet of 41.86 million tonnes at 2.2 grams per tonne of gold for 2.96 million ounces of gold. The company reported that ore resources would be about 9.35mt at 1.8g/t of gold for 545,000oz of gold. The ore reserves were estimated from open pit optimisations based on gold prices of between $1150 and $1300 per ounce. The company purchased the Mt Magnet operation in July 2010, and is on track to achieve first production in January nextyear. The first blast of waste material at the mine occurred on September 23. Meanwhile, September quarter production from the company’s Wattle Dam gold mine was expected to deliver 16,000oz of gold. Production at Wattle Dam has been lower than in previous quarters due to a failure within the crushing circuit at the Burbanks treatment plant, 65 kilometres from Wattle Dam. Production from the mine was also impacted by milling of lower-grade ore, as development of the mine’s Block D mining zone continued.
Ramelius reported that a hire crusher had been sourced, but production would still be impacted in the December quarter as repairs were completed. To date, drilling below Block D has not intersected any significant results, but Ramelius reported that recent drilling to the north of Block D and below had intersected encouraging alterations. Ramelius was listed on the ASX in March 2003 to explore gold and nickel projects WA’s Goldfields region. The company has produced more than 150,000oz of gold from Wattle Dam during the mine’s time in operation. Ramelius holds the equivalent of $90 million in cash and gold.

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