TIDMVGM
RNS Number : 4845X
Vatukoula Gold Mines PLC
13 January 2014
13 January 2014
Vatukoula Gold Mines plc
("Vatukoula" or "the Company")
Operational Update for the First Quarter ended 30 November
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 first quarter ended 30 November 2013 ("Q1").
-- Completed the first tranche of the US$ 40 million investment
agreement with Zhongrun International Mining Co. Ltd ("Zhongrun") -
US$20 million in November 2013
-- Quarterly production of 11,090 ounces gold, with 11,415
ounces shipped. This represents a 2% increase in gold shipped
compared to the previous quarter
-- 14% increase in underground ore mined to 62,073 compared to the previous quarter
Operating Results 3 months 3 months 3 months 3 months 3 months
ended ended ended ended ended
Nov 2013 Aug 2013 May 2013 Feb 2013 Nov 2012
(Q1) (Q4) (Q3) (Q2) (Q1)
-------------------------------------- ---------- ---------- ---------- ---------- ----------
Total underground tonnes mined
(ore, waste & capital) 104,805 96,701 94,793 89,341 117,160
Strike drive development (metres) 315 395 405 342 540
Capital development (metres) 1,327 1,131 976 765 1,625
Ore processed (tonnes) 107,115 111,936 100,182 103,916 112,944
Average ore head grade (grams/tonne) 3.97 3.96 3.48 3.70 3.88
Total recovery 79.37% 79.44% 79.76% 74.82% 71.86%
Gold produced 11,090 11,442 9,005 8,861 10,549
Gold shipped 11,415 11,219 8,704 9,113 10,482
-------------------------------------- ---------- ---------- ---------- ---------- ----------
Unaudited Financial Highlights: 3 months 3 months
ended November ended November
2013 2012
--------------------------------------------------- ---------------- ----------------
Revenue (GBP'000) 9,256 11,335
EBITDA (GBP'000) (2,493) 380
Cash (used) / generated from operating activities
(GBP'000) (1,367) 834
Underlying operating (loss) (GBP'000) (4,450) (1,257)
Cash cost per ounce shipped (US$/ounce) 1,363 1,590
Average realised gold price (US$/ounce) 1,285 1,721
Basic loss per share (pence) (2.00) (1.17)
Capital Investment (GBP'000) 3,002 5,171
Cash and Cash equivalents (GBP'000) 9,382 3,998
--------------------------------------------------- ---------------- ----------------
David Paxton, CEO of Vatukoula Gold Mines, commented:
"The quarter was highlighted by the completion of the US$ 20
million equity portion of the US$40 million investment agreement
with our majority shareholder Zhongrun.
With the funds we have placed the orders to return our stock
levels of vital spares at the mine and have arranged for a
comprehensive refurbishment program for the underground mining
fleet. These steps ensure that we can complete the essential
development as detailed in our long term plans. Other vital
maintenance programs have been scheduled as required.
The US$40 million will provide us with the balance sheet
flexibility to embark on our capital investment programme in this
fiscal year and we look forward to working with Zhongrun as we
deliver our Company strategy to grow our production to sustainable
and profitable levels."
Operating Results
3 months 3 months 3 months 3 months 3 months
ended ended ended ended ended
Nov 2013 Aug 2013 May 2013 Feb 2013 Nov 2012
(Q1) (Q4) (Q3) (Q2) (Q1)
-------------------------------------- ---------- ---------- ---------- ---------- ----------
Underground Mining
Total underground tonnes mined
(ore, waste & capital) 104,805 96,701 94,793 89,341 117,160
Operating development (metres) 2,886 3,199 3,666 3,419 3,360
Strike drive development (metres) 315 395 405 342 540
Capital development (metres) 1,327 1,131 976 765 1,625
Total development (metres) 4,528 4,725 5,047 4,526 5,525
Sulphide Plant
Sulphide ore delivered (tonnes) 62,073 54,637 59,456 64,023 62,040
Sulphide head grade (grams/tonne) 5.30 5.85 4.53 4.55 5.19
Oxide Plant
Oxide ore delivered (tonnes) 47,593 57,076 40,424 41,017 50,530
Oxide head grade (grams/tonne) 2.06 2.15 2.36 2.36 2.28
Total (sulphide + oxide)
Ore processed (tonnes) 107,115 111,936 100,182 103,916 112,944
Average ore head grade (grams/tonne) 3.97 3.96 3.48 3.70 3.88
Total recovery 79.37% 79.44% 79.76% 74.82% 71.86%
Gold produced 11,090 11,442 9,005 8,861 10,549
Gold shipped 11,415 11,219 8,704 9,113 10,482
-------------------------------------- ---------- ---------- ---------- ---------- ----------
Cash Costs
-------------------------------------- ---------- ---------- ---------- ---------- ----------
Cash cost per ounce shipped
(US$) 1,363 1,393 1,812 1,688 1,590
Cash cost per tonne mined
and milled (US$/tonne) 145 140 157 148 148
Average realised gold price
(US$/ounce) 1,285 1,317 1,474 1,636 1,721
-------------------------------------- ---------- ---------- ---------- ---------- ----------
Underground Production and Development
The initial funds from the Zhongrun investment were received in
late October and early November, hence for the majority of the
quarter capital was constrained and our planned capital development
programme was not initiated as we restocked key supplies.
Total tonnes of ore, waste and capital mined for the quarter
ended 30 November, 2013 decreased by 13% to 104,805 tonnes compared
to the same period last year, but was 8% higher than the previous
quarter ended August 2013. Once again limited availability of the
underground mining fleet due to cash constraints limited our
underground production. Total development, when measured by
distance advanced was 4% lower than the previous quarter and 20%
lower than the equivalent period last year. Development advance was
also affected by the limited availability of the underground mining
fleet.
The ore delivered from underground for the quarter ended 30
November, 2013 was 62,073 tonnes, a 14% increase compared to the
previous quarter and approximately the same level for the same
period last year.
The average underground grade for the quarter ended 30 November
2013 was 5.30 grams per tonne 9% lower than the previous quarter
and 2% higher than the same period last year.
We are currently mining a mix of historic low grade stopes and
newer areas as they are opened. The grade delivered will continue
to be erratic until we have established sufficient new ore mining
areas, which is the focus of the current development program.
Surface Production
Production from surface oxides and sulphide waste piles for the
three months delivered was 47,593 tonnes at a grade of 2.06 grams
gold per tonne. Surface mining produces both oxide material from
open pit mining and sulphide material from old waste dumps. During
the quarter we terminated the surface oxide mining, to focus on the
higher grade sulphide waste dumps available in the mine area. This
ore is currently processed as sulphide material. The termination of
the oxide mining led to drop of 17% in ore delivered from surface
mining compared to the previous quarter.
Vatukoula Treatment Plant ("VTP")
During the three months, the VTP processed 107,115 tonnes of ore
which was a 4% reduction compared to the previous quarter (111,936
tonnes), and a 6% reduction to the same period last year (112,944
tonnes).
Gold recovery for the three-month period was 79.37%, which was
similar to the previous quarter (79.44%). The composition of
surface oxide ore has changed with more sulphide material in the
surface waste dumps that has not been fully oxidised. Although the
surface waste material has a higher grade (2.06 grams per tonne),
the gold recovery is much lower due to the locked gold in
sulphide.
As previously detailed, surface waste dump material production
is being maintained while the underground ore production is
limited. Mining of this material will cease once underground
production is established.
Unaudited Financial Highlights
Revenue for Q1 was GBP9.3 million, lower than the same period
last year (GBP11.3 million). This was primarily as a result of a
decrease in the market price of gold, a 30% year on year decrease
in US$ value. The average realised gold price was US$1,285 in Q1
compared to US$1,721 per ounce in the same period in 2012.
The net cash generated in operating activities decreased from
GBP0.8 million generated Q1 last year to GBP1.4 million used Q1
this year. Prior to movements in working capital these figures are
GBP0.9 million generated and GBP0.03 million used respectively. The
large movement in working capital (cash used of GBP 1.4 million in
Q1) is a result of restocking of stores and returning the majority
of our creditors to normal trading terms.
Capital investment decreased from GBP5.2 million in Q1 last year
to GBP3 million in Q1 this year. This decrease is mainly
attributable to a lack of working capital during the majority of
the quarter while we completed the first tranche of the US$40
million investment agreement.
Cash costs for Q1 were US$1,363 per ounce shipped (Q1 last year:
US$1,590 per ounce shipped). The main reason for the decrease in
cash costs per ounce is the increase in grade and recovery from the
mill and in addition a 2% decrease cash costs per tonne mined and
milled from US$148 in Q1 last year to US$145 in Q1 this year.
Despite the decrease in the cost of sales the drop in gold price
and changes in GBP / F$ exchange rates (which resulted in a
non-cash GBP1.5 million charge to our intercompany loan) resulted
in a loss for the period of GBP4.4 million.
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.
-Ends-
Enquiries:
Vatukoula Gold Mines plc
+ 44 (0)20 7440
David Paxton 0643
Kiran Morzaria
W.H. Ireland Limited Pelham Bell Pottinger
James Joyce + 44 (0)20 7220 Charles Vivian + 44 (0)20 7861
James Bavister 1666 Daniel Thöle 3232
This information is provided by RNS
The company news service from the London Stock Exchange
END
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