Quarter Time Wrap
THE BOURSE WHISPERER: Once again The Roadhouse’s inbox has been inundated with quarterly reports this season. Here’s a random selection of what companies had to say.
SARACEN MINERAL HOLDINGS (ASX: SAR)
Record Quarter Gold Production
• Record Quarter Production – 36,430 ounces at cash cost of $991 per ounce;
• Mill grade plus 2 grams per tonne for the quarter – the first time since operations commenced;
• Year to date production of 98,909 ounces at cash costs $993 per ounce;
• On track for record production year of 125,000 to 135,000 ounces at cash costs of $975 to -1,075 per ounce;
• Grades from Deep South of 4g/t approximately 87 per cent higher than reserves;
• Expansion Projects on track. The Whirling Dervish cut back on schedule and process plant upgrade due for completion by December.
• Drilling at Red October outside of existing ore reserve returns 5 metres at 15.3g/t and 2.2 metres at 53.9g/t;
• Gold hedging of 188,300 ounces at average price of $1,698 per ounce; and
• Mark to Market value of hedges of $56 million at $1,300 per ounce spot.
“Our Carosue Dam Operations have recorded consecutive production records with 32,038 ounces in the December quarter being eclipsed by 36,430 ounces in this March quarter,” Saracen Mineral Holdings managing director Raleigh Finlayson was quoted as saying.
“The most pleasing aspect of our latest production record is that it was achieved with only 14 per cent of ounces being contributed from the Red October underground mine versus 27 per cent in the previous quarter as the mine focused on development work on the Central lode.
“This highlights the contribution being made from our open pit operations, particularly Deep South.
“We are pleased that the major capital works phase at Red October to establish the primary ventilation network and access the Central Lode is largely behind us, with our focus reverting back to ore production on multiple stoping horizons.
“We are ahead of our revised production guidance, which we increased to 125,000 to 135,000 ounces in December, on the back of a strong start to the calendar year which is set to continue.
“Saracen’s prudent capital management is reflected in the 188,000 ounces of hedging we have at an average price of $1698 per ounce which provides a measure of comfort given the erratic performance of bullion and gold equities of late.
“The mark to market value of our current hedging is $56 million (net after costs) assuming a spot gold price of $1,300 per ounce.
“This puts us in the enviable position of either delivering into our hedge to provide gold price protection over the next 3.5 years or a partial close-out or resetting the price to release cash to reduce debt.
“No decision has been made but we are continuing to closely monitor the spot price and our debt position.”
SANDFIRE RESOURCES (ASX: SFR)
DeGrussa Copper Mine Stage 2 of the open pit completed in April 2013.
• Ramp-up of underground mine on schedule to complete the transition to wholly underground operations;
• Plant ramp-up and optimisation continuing: on track for nameplate production rates from mid-CY2013. Strong performance so far in April with some 3,000 tonnes of copper-in-concentrate recovered for the month to date (15 days);
• Quarterly copper sales of 12,297 tonnes (Q2FY2013: 22,454 tonnes) and gold sales of 10,115 ounces (Q2FY2013: 13,184 ounces);
• Final high-grade DSO shipment completed in early January 2013, with further lower grade DSO shipments to be completed during the June 2013 Quarter; and
• First shipment undertaken from newly-completed port facility at Port Hedland.
Exploration
• Outstanding assay results received from drilling targeting Conductor 5 orebody:
26.1m at 7.2 per cent copper and 3.1g/t gold;
28.3m at 5.3 per cent copper and 2.7g/t gold; and
15.2m at 8.6 per cent copper and 2.3g/t gold.
• Ore Reserve and Mineral Resource upgrade underway including recently drilled extensions to Conductor 4 & 5.
• Exciting new near-mine and regional exploration targets being progressed.
Corporate
• First $50 million debt repayment completed, with funds deposited for next $45 million payment scheduled for June 201.
PEAK RESOURCES (ASX: PEK)
Revised Mineral Resource
A new and increased Mineral Resource was announced on 4th April 2013. At a 3.0 per cent lower grade cut the Mineral Resource for the Bastnaesite Zone weathered mineralisation targeted for initial development is:
21.6 million tonnes at 4.54 per cent rare earth oxides (REO), for 982,000 tonnes of contained REO.
Potential to support significantly increased production levels and an extended mine life, based on a simple sulphuric acid leach operation, compared to the 10,000 tonnes per annum REO estimated in the December 2012 Scoping Study.
An increased production rate and higher grades, combined with the enhanced beneficiation ability will significantly improve the strong economics and further reduce cash costs.
A revised Scoping Study and economic assessment to be completed during June Quarter to quantify cost reductions and revised project economics at a range of REO production levels: 5,000tpa, 10,000tpa and 20,000tpa.
Beneficiation
Advances in beneficiation achieved during the Quarter lead to lower capital costs through a smaller acid and leach plant.Operating costs will also be reduced through lower sulphuric acid consumption
SX Pilot Plant, ANSTO(Australian Nuclear Science and Technology Organisation).
Production of a rare earth chloride feed solution for the solvent extraction (SX) pilot plant from a 1.3 tonne bulk sample of Ngualla rare earth mineralisation was completed at ANSTO during the quarter.
An average of 83 per cent recovery of rare earths was achieved in the acid leach stage, independently verifying the simple sulphuric acid leach recovery process and the robustness of the process flow sheet at a larger scale.
The SX Pilot Plant is on track to produce four separated greater than 99 per cent purity REO products successively over the next few months.
Appointed financial advisors to assist in identifying and securing strategic partners to assist with funding the longer-term development of the Ngualla rare earth project and product off-take agreements.
The company had $2.25 million cash on hand at the end of the Quarter.