(MENAFN- ProactiveInvestors)
() has produced 19699 ounces of gold for the December quarter 2014 above its guidance of 18000 ounces from its Nullagine Gold Project in Western Australia’s Pilbara region.
Delivered gold poured for the year ended 31st December 2014 was 75867 ounces for revenue of A$115.7 million.
All in-sustaining costs for 2014 was A$1295 per ounce due to the impact of one-off costs including redundancies stockpile write‐off and waste stripping adjustments.
Millennium has implemented extensive project and corporate cost reduction initiatives with benefits expected to be seen during the first quarter of 2015.
Implementing these initiatives has resulted in additional one off costs being absorbed in the quarter.
The company has made senior debt repayments of $3.2 million during the quarter and also made a full repayment of its $2.823 million bond facility.
It will release its full-year 2015 production guidance later in the first quarter 2015 after review of the Life of Mine Plan (focused on optimising grade and throughput) which in conjunction with the cost reduction initiatives will allow further material debt reduction during 2015.
Work is also progressing on understanding the metallurgy and processing of the fresh (semi‐refractory) mineralised zones encountered.
This bench scale testwork is in progress and will be reported once a conceptual flow sheet for its treatment has been developed. This flow sheet will form the basis of further study work to understand the viability of the material.
Based upon a review of the Ore Reserve estimate the company expects to book a non‐cash impairment in its full year financial statements for the 12 month period to 31st December
2014.
Operational Activities
Production for the quarter was achieved in terms of plant throughput and fine gold produced at 19699 ounces.
Continuous ore haulage was achieved from the higher grade ABC and D Reef deposits at Golden Gate allowing 127102 tonnes of this material to be treated during the quarter.
The processing plant performed well during the quarter with throughput rates averaging 190 tonnes per hour against nameplate capacity of 189 tonnes per hour despite a 2 day shutdown to replace the mill gear box.
Mill availability was 98% and utilisation of available time was 99% giving an overall run time of 97% being similar to that experienced in the previous quarter.
Average grade milled was 12% higher than previous quarter at 1.92 grams per tonne gold primarily due to a higher ratio of Golden Gate ore milled and improved mining performance across operating pits.
As mining operations have advanced into the fresh ore zones within the Golden Eagle deposit the company has experienced several problems from parts of the fresh zones namely: reconciliation issues lower grades and variable metallurgical recovery.
Although the previous feasibility study work on these fresh zones indicated lower recovery and harder ore and those factors were taken account of in mine planning actual results have been more erratic and in some areas even lower than planned grades and recoveries have been achieved.
Understanding the metallurgical processing requirements for all the fresh material zones within the Golden Eagle deposit is critical not only to be able to fully exploit the current mining inventory but also the deposit at depth ‐ which is not closed out.
Conceptual flow sheet testing at laboratory scale is in progress and will be reported when a conceptual flow sheet has been developed.
When the test work is completed the possible options will be assessed and reported on.
While the full impact is not known Millennium expects to book a non‐cash impairment in its full year financial statements for the 12 month period to 31st December 2014.
As a result the company is reviewing its Life of Mine Plan with a view to bringing forward development of its eastern satellite deposits namely Bartons All Nations Shearers Otways Little Wonder and the CCJV deposits.
These deposits will provide predominantly oxide feed to the mill for the next 2 years and will allow it to maintain a yearly production rate of between 75000 to 80000 ounces of fine gold.
This will provide the company time to determine the best (most economically viable) processing route to treat the Golden Eagle fresh material during subsequent years.
Operating Costs
All‐in Sustaining Cost per ounce was A$1479 per ounce for the quarter which was 23% higher than the previous quarter.
Costs were severally unfavourably impacted by a two main factors:
- One off costs of A$39 per ounce associated with restructuring the operations (redundancies); and
- A write down in recoverable ounces in the 500000 tonne stockpile of Golden Eagle material of A$123 per ounce resulting from a downward revision to the metallurgical recovery rate.
A further A$158 per ounce of waste stripping adjustment was brought to account as mining entered the bottom of ABCD reef due to achieving a lower waste to ore strip ratio.
For the 12 months ended 31st December 2014 all‐in sustaining cost averaged A$1295 per ounce.
The benefits of ongoing operational improvements that will reduce costs are a result of the following:
- Negotiation of a new haulage contract with 40% lower rates than previously incurred;
- Reduced mining fleet from 4 to 3 operating shifts;
- A contract extension with Western Plant Hire incorporating a $1.2 million saving;
- Reducing the organisation by 17 personnel; and
- Changing fly‐in / fly‐out configurations.
Forward Guidance
Production guidance for the March quarter 2015 is expected to be between 16000 to 18000 ounces gold.
Full year 2015 production guidance will be released in the current quarter after review of the Life of Mine Plan.
Corporate
Gold sales revenue for the December quarter 2014 totalled $32.95 million at an average gold price of A$1565 per ounce consisting of 3216 ounces sold at an average spot price of A$1408 per ounce and 17832 ounces delivered into the hedge at an average price of A$1594 per ounce.
For the 12 months ended December 2014 both gold sales and revenue were on target at 75867 ounces sold for A$115.7 million revenue at an average overall price received of A$1525 per ounce.
During the quarter $3.2 million in repayments were made against the Millennium’s Senior Facility bringing total repayments for the 12 months to end of December 2014 to $9.57 million.
As at 31 December 2014 the company had repaid approximately 53% ($23.6 million) of the outstanding Principal on this Senior Facility with $21.4 million outstanding requiring repayment by 30 June 2016.
The remaining Principal of the equipment lease facilities was $3.3 million.
Millennium’s short term strategy will focus on increasing processing plant throughput and reducing both debt and costs.
On 23rd December 2014 the company announced a $5 million drawdown from the subordinated working capital facility agreed with its major shareholder the IMC Group bringing the total drawn on this Facility to $12 million.
At 31st December 2014 its hedge book had a mark‐to‐market valuation of $2.4 million “out of the money” ($14.6 million “in the money” at 31 December 2013) based on the spot price of A$1469 per ounce at that date.
The remaining hedge structure requires 73939 ounces to be delivered by June 2016 at an average forward price of A$1466 per ounce.
Cash and bullion on hand amounted to $3.53 million at 31st December 2014.
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