TIDMVGM
RNS Number : 7879H
Vatukoula Gold Mines PLC
25 June 2013
25 June 2013
Vatukoula Gold Mines plc
("Vatukoula" or "the Company")
Operational Update for the Third Quarter and Nine Months ended
31(st) May 2013
Vatukoula Gold Mines Plc (AIM:VGM), the AIM listed gold
producer, is pleased to announce its unaudited preliminary
operational results from its 100% owned Vatukoula Gold Mine in Fiji
for the third quarter and nine months ended 31(st) May 2013.
-- Secured GBP4.5 million of working capital finance via an
equity placing with DRK Energy Co. Limited ("DRK") at an 88%
premium to market
-- DRK have agreed to work in conjunction with VGM to source the
required debt financing to fund the Company's planned expansion
programme
-- Lowered cash costs per tonne from US$185 per tonne in the
nine months ended May 2012 to US$151 per tonne in the nine months
ended May 2013
-- Completed the switch from strike drive development to
footwall development in the Smith section of the mine. This will
allow more efficient extraction and lower dilution of ore,
delivering a higher overall grade
Operational Highlights: 3 months 3 months 3 months 9 months 9 months
ended ended ended ended ended
May 2013 Feb 2013 Nov 2012 May 2013 May 2012
(Q3) (Q2) (Q1)
-------------------------------------- ---------- ---------- ---------- ---------- ----------
Total underground tonnes mined
(ore, waste & capital) 94,793 89,341 117,160 301,294 357,472
Strike drive development (metres) 405 342 540 1,287 3,375
Capital development (metres) 976 765 1,625 3,367 3,431
Ore processed (tonnes) 100,182 103,916 112,944 317,042 357,375
Average ore head grade (grams/tonne) 3.48 3.70 3.88 3.75 4.38
Total recovery 79.76% 74.82% 71.86% 74.10% 79.07%
Gold produced (ounces) 9,005 8,861 10,549 28,416 41,389
Gold shipped (ounces) 8,704 9,113 10,482 28,298 41,019
-------------------------------------- ---------- ---------- ---------- ---------- ----------
Financial Highlights: 9 months ended 9 months ended
May 2013 May 2012
------------------------------------------------- --------------- ---------------
Revenue (GBP'000) 29,342 43,229
EBITDA (GBP'000) (2,204) 293
Cash (used) / generated in operating activities
(GBP'000) (631) 4,675
Underlying operating (loss) (GBP'000) (7,152) (4,337)
Cash cost per ounce shipped (US$/ounce) 1,689 1,609
Average realised gold price (US$/ounce) 1,617 1,656
Basic loss per share (pence) (6.18) (5.51)
Capital Investment (GBP'000) 10,189 10,322
Cash and Cash equivalents (GBP'000) 1,670 6,588
------------------------------------------------- --------------- ---------------
David Paxton, CEO of Vatukoula Gold Mines, commented:
"As previously advised Q3 production remained at a restricted
rate, as we continue work to secure long- term financing. We have
maintained our policy of carrying out only essential development
required for current production requirements and limited long-term
development when possible.
Cash costs per tonne have remained steady, which bodes well for
our long-term expansion plan which we expect will enable us to
achieve a cash cost per tonne of approximately US$ 144 per tonne
and a grade of 6.9 grams per tonne. This would result in a cash
cost of approximately US$ 860 per ounce.
We are continuing discussions with our strategic investors and
envisage completing the long-term debt financing we require towards
the end of September 2013."
Operating Results
3 months 3 months 3 months 9 months 9 months
ended ended ended ended ended
May 2013 Feb 2013 Nov 2012 May 2013 May 2012
(Q3) (Q2) (Q1)
----------------------------------------- ---------- ---------- ---------- ---------- ----------
Underground Mining
Total underground tonnes mined
(ore, waste & capital) 94,793 89,341 117,160 301,294 357,472
Operating development (metres) 3,666 3,419 3,360 10,445 12,284
Strike drive development (metres) 405 342 540 1,287 3,375
Capital development (metres) 976 765 1,625 3,367 3,431
Total development (metres) 5,047 4,526 5,525 15,098 19,090
Sulphide Plant
Sulphide ore delivered (tonnes) 59,456 64,023 62,040 185,519 234,622
Sulphide head grade (grams/tonne) 4.53 4.55 4.74 4.76 5.22
Oxide Plant
Oxide ore delivered (tonnes) 40,424 41,017 50,530 131,971 123,476
Oxide head grade (grams/tonne) 2.36 2.36 2.28 2.34 1.78
Total (sulphide + oxide)
Ore processed (tonnes) 100,182 103,916 112,944 317,042 357,375
Average ore head grade (grams/tonne) 3.48 3.70 3.88 3.75 4.38
Total recovery 79.76% 74.82% 71.86% 74.10% 79.07%
Gold produced (ounces) 9,005 8,861 10,549 28,416 41,389
Gold shipped (ounces) 8,704 9,113 10,482 28,298 41,019
----------------------------------------- ---------- ---------- ---------- ---------- ----------
Cash Costs
----------------------------------------- ---------- ---------- ---------- ---------- ----------
Cash cost per ounce shipped (US$) 1,812 1,688 1,590 1,689 1,609
Cash cost per tonne mined and milled
(US$/tonne) 157 148 148 151 185
Average realised gold price (US$/ounce) 1,474 1,636 1,721 1,617 1,656
----------------------------------------- ---------- ---------- ---------- ---------- ----------
Underground Production and Development
Mining operations at Vatukoula continue to be limited by capital
and cash flow constraints. We have prioritised our mining
operations on production stoping followed by essential development.
The program to open new areas has been maintained, but on a limited
basis. Ore production can be maintained in the short term, but
development to open new areas must be initiated before our long
term production targets can be achieved.
Work on the 20 level shaft station at Philip Shaft continued,
with the focus on removing spillage from the shaft. Our development
program in the Smith section, focusing on the Matanagata orebody is
now operating entirely with the new footwall drive system. All
stoping ore is delivered from the stope ore pass via a truck chute
into the truck, and then to the shaft ore pass system. Footwall
drive development allows more efficient mining by increasing the
extraction ratio, lowering ore dilution and reducing double
handling. However, footwall drive development places a greater
emphasis on underground trucks, so implementation of this
methodology across all sections will require a larger haulage fleet
and improved overall availability. The increased fleet will be
funded from the proposed debt financing.
Total tonnes of ore, waste and capital mined for the first 9
months ended May 2013 decreased to 301,294 tonnes compared to
357,472 tonnes in the same period last year. The lower tonnages
were primarily driven by decreases in operating and strike drive
development metres.
The ore delivered from underground in the first 9 months was
185,519 tonnes compared to 234,622 tonnes in the same period last
year. This reduction was due to lower stope availability, lower
average stope heights and lower strike drive development which is
typically delivered as ore.
The average underground grade for the period was 4.76 grams per
tonne, which was lower than the same period last year (5.22 grams
per tonne). The year on year variance is a result of lower grades
being delivered from the Smith shaft. The lower grade from this
shaft is as a result of local structural controls on an area of the
Matanagata deposit.
Surface Production
Production for the 9 months ended May 2013 from surface oxides
and sulphide waste piles was 131,971 tonnes at a grade of 2.34
grams per tonne (123,476 tonne at 1.78 grams per tonne for the same
period last year). Ore was delivered from both sulphide waste dumps
and surface oxide production. Sulphide waste is being processed
through the sulphide circuit. The process plant management team
have determined that surface sulphide material can be processed in
the sulphide process, which results in higher recovery rates.
Vatukoula Treatment Plant ("VTP")
During the 9 months ended May 2013, the VTP processed 317,042
tonnes compared with 357,375 for the same period last year. The
decrease was driven by lower underground ore delivered to the mill.
The average grade decreased to 3.75 grams per tonne from 4.38 grams
per tonne delivered over the same period. This was driven by lower
production of higher grade ore from underground mining
operations.
Recoveries were 74.10% for the 9 months ended May 2013. This was
lower than the comparable period last year (79.07%). Average
recoveries continue to be affected by the sulphide waste material
mined from the surface. As previously mentioned, in the long-run
surface mining will be phased out and we expect that recoveries
will return to between 81% and 85% depending on grades delivered to
the mill. In the interim VTP staff have switched sulphide waste
processing to the sulphide plant to increase recoveries from this
source.
Financial Highlights
Revenue for the nine months ending 31 May 2013 of GBP29.3
million was lower than the same period last year (GBP43.2 million).
The Group's year on year sales volume decreased as a result of
lower tonnes and lower grades delivered to the VTP. The average
realised gold price was US$1,617 in the nine months ended May 2013
compared to US$1,656 per ounce in the same period in 2012.
The underlying loss increased to GBP (7.2) million from GBP
(4.3) million in the same period last year. This increase is
attributed to the decrease in revenue of GBP13.9 million compared
to the same period last year. This decrease in revenue was offset
by a reduction in cost of sales which reduced from GBP41.2 million
in the nine months end May 2012 to GBP30 million over the nine
months ended May 2013.
The net cash used in operating activities increased from GBP4.7
million generated in the nine months ended May 2012 to GBP0.6
million used in the nine months ended May 2013. Prior to movements
in working capital these figures are GBP1 million and GBP (1.5)
million respectively.
Capital investment decreased from GBP10.3 million in the nine
months ended May 2012 to GBP10.1 million in the nine months ended
May 2013. This drop is mainly attributable to the decrease in
resource and reserve drilling activities.
Cash costs nine months ending 31 May 2013 were US$1,689 per
ounce shipped (US$1,609 per ounce shipped for the same period last
year.). The main reason for the increase in cash costs per ounce is
the lower grade and recovery from the mill. These decreases were
positively offset by lower cash costs per tonne mined and milled
from US$185 in nine months ending 31 May 2012 Q2 to US$151 in nine
months ending 31 May 2012.
Outlook
While we continue to source the financing required to achieve
our long term targets, we do not expect any material changes in our
production figures. We anticipate the completion of the debt
financing near the end of September 2013, after which we will be
able to fully implement our strategy of achieving our long-term,
cost effective sustainable gold production targets.
Qualified Person
Qualified Person Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed
and approved the information contained in this announcement. Kiran
holds a Bachelor of Engineering (Industrial Geology) from the
Camborne School of Mines and an MBA (Finance) from CASS Business
School. Kiran is the Chief Financial Officer of VGM.
Enquiries:
Vatukoula Gold Mines plc. Pelham Bell Pottinger
+ 44 (0)20 7440 + 44 (0)20 7861
David Paxton 0643 Daniel Thöle 3232
Kiran Morzaria Marcin Zydowicz
W.H. Ireland Limited Daniel Stewart
+ 44 (0)20 7220 +44 (0)20 7776
James Joyce 1666 Colin Rowbury 6550
James Bavister
This information is provided by RNS
The company news service from the London Stock Exchange
END
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