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[Gold review: continued]

Exploration at Paulsens continues, with drilling underway to identify further extensions to the Voyager One lode as part of the push to increase the Stage Two mine plan. A second rig is drilling for the Voyager Two lode, which has the potential to extend the mine life well beyond 2011. Citigold Corporation Ltd (ASX: CTO) announced its maiden profit at its Charters Towers Gold Project, with gold production up 36 per cent on 2009. Even though the profit was modest at $73,000, Citigold has proven it can mine the difficult narrow vein field profitably even at a low total output of 16,000 ounces. Revenue and gross profit both increased by 50 per cent demonstrating the company’s ability to grow revenue whilst keeping the costs under control. It was not just profitability that saw solid gains during the period. EBITDA increased almost 350 per cent, cash flows generated from operations up almost 150 per cent to $6.7 million and net assets up six per cent to $174 million and gold production grow 36 per cent. The company retains its low debt status with a gearing ratio of just 3.08 per cent. This augurs well for the future as negotiations with one of its Top Ten shareholders, Zhaojin Mining, continue with a view to further funding the advancement of the project. Citigold announced it is seeking $70 million to develop the City project and an additional $40 million to expand its Imperial Project which includes the operating warrior Mine. Zhaojin is listed on the Main Board of the Stock Exchange of Hong Kong Limited (Stock Code HK1818) and operates an integrated large-scale gold production business. The company is one of the leading gold producers in the People’s Republic of China with mine production for the 2009 calendar year of 360,000 ounces of gold. Institutional funds are also showing interest, and Citigold announced in September it had successfully completed a capital raising of $3.5 million principally from Australian and European funds. The funds raised from this share placement at 10 cents are to be used towards expanding Citigold’s mining operations at Charters Towers and for working capital. Mark Lynch, the Managing Director said: “The recent interest shown by institutional investors I believe reflects a broad confidence in Citigold’s strategy for the future growth of the Charters Towers gold operations.”

being a cornerstone investor in the Australian company China Yunnan Copper Australia (ASX: CYU). CYU will offer a share purchase plan, with A$1.5m underwritten by Patersons Securities to help fund domestic and international projects. In September, China Yunnan announced the potential for a tenfold increase in target tonnage at the Stanley’s Hope Gold Project in Queensland, located at Pentland, 100km west of Charters Towers. The Stanley’s Hope Mining Lease (100 per cent CYU) – hosts epithermal gold Pajingo style mineralisation. Drilling included 1,016 metres drilled in two diamond holes on granted mining lease ML1631. An extensional drill program has been proposed based on the results and will take place in 2011. Advantages of the Stanley’s Hope project are: shallow mineralisation, a granted mining lease and close proximity to infrastructure. Also in Queensland, Paradigm Metals (ASX: PDM) has commenced a 2,000 m air core and percussion drill program at the Toolebuc project, targeting iron oxide-copper-gold mineralisation. The company’s 50 per cent wned Toolebuc project is a joint venture with Exco Resources and is located 40 km southeast of Cloncurry northwest Queensland. Paradigm is the manager of the joint venture, which is targeting mineralisation under shallow cover believed to be 20-50m thick. Drill holes will initially test several previously undrilled magnetic anomalies to total depths of up to 100m. All things considered, gold has a bright future for at least the next two years, and even if the US price retracts if the US economy improves, the Australian dollar exchange rate will probably reduce to maintain the Australian gold price in a band between A$1,000 to $1,200 per ounce. This will still give most Australian producers a strong profit margin on cash costs, and few businesses are fortunate enough to see a margin of 50 per cent of revenue.

Chris A J Towsey, MSc, BSc(Hons), Dip Ed, FAIMM, MAIG, MSME, CP, MMICA, MAICD Chief Operating Officer, Citigold Corporation Limited Chris Towsey is an experienced mining and exploration geologist with expertise in narrow vein gold deposits. He is currently Chief Operating Officer and Site Senior Executive for Citigold Corporation, having originally joined the company in July 2002 as General Manager Mining. Citigold is an ASX Australian Top 200 company and operates underground gold mines at Charters Towers. Chris is a qualified OH&S auditor and was General Manager Australia for the National Occupational Safety Association (NOSA) from 2000 to 2002. He was formerly Chief Geologist and Executive Manager Exploration for Emperor Mines Ltd at Vatukoula gold mine in Fiji from 199498, and General Manager Minerals for Century Resources Ltd in 1998. He operated a consulting geology business as Managing Director of Pathfinder Exploration Pty Ltd for 12 years. He holds Honours and Masters Degrees in geology from Sydney University and is a Chartered Professional geologist. He is a Member of the Australian Institute of Company Directors, and a former Director of the Queensland Resources Council and Great Mines Ltd. He has worked in 26 countries around the world. This editorial has been presented in association with Minecap Solutions Pty Ltd.

Other Chinese companies are active in Australia, with Yunnan Copper Industry (Group) Co Ltd rd Australasian edition AustralasianMining MiningReview Review2011: 2011:3issue 2.1

Australasian Mining Review Issue 1 2011  

The Australasian Mining Review is a high quality publication that is destined to become an indispensable tool for all stakeholders and parti...

Australasian Mining Review Issue 1 2011  

The Australasian Mining Review is a high quality publication that is destined to become an indispensable tool for all stakeholders and parti...

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