Southern Gold completes third Cannon gold processing campaign
THE DRILL SERGEANT: Southern Gold (ASX: SAU) released the results of its third processing campaign of ore treated from the company’s Cannon gold mine near Kalgoorlie.
The latest processing campaign yielded 2095 ounces of gold.
The mine is managed by Southern Gold’s development partner Metals X (ASX: MLX) with ore being treated at its South Kalgoorlie Operations (SKO) Jubilee plant.
Southern Gold explained the June campaign gold grade of 2.09 grams per tonne was lower than previous head grade levels, but is in line with expectations given ore from this parcel was primarily lower grade blocks in the cutback between the Stage 1 and Stage 2 pits.
The company expects the gold grades to improve as deeper parts of the orebody are accessed with a projected remaining average gold grade for the open pit of 3.84g/t gold.
A total of approximately 14,600 tonnes at 2.67g/t gold was unable to be processed due to wet weather halting transport from the Cannon ROM.
Southern Gold indicated this material will be used as part of the next batch, currently scheduled for August 2016, after which processing is anticipated to be relatively continuous until March 2017.
“Southern Gold is very pleased with the continuing excellent recovery achieved in this campaign of 92.5 per cent, reflecting adjustments made at the Jubilee mill,” Southern Gold said in its ASX announcement.
“The previously reported ‘Life of Mine’ metallurgical recovery estimate by Metals X was 86.3 per cent.
“Under the base case financial model and assuming a 90 per cent Life of Mine metallurgical recovery factor and assuming a spot gold price of $1795 per ounce (spot price at time of writing is $1799/oz) net profit attributable to Southern Gold is projected to be $17.2 million, the equivalent of $0.47/Southern Gold shares.
“Actual cash distribution to Southern Gold is scheduled for December 2016 to March 2017 and will be net of MLX debt repayments currently estimated to be $2.18 million, or $0.06/share, implying total net open pit ‘Life of Mine’ cash of $0.41/share.”
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Website: www.southerngold.com.au