(MENAFN- ProactiveInvestors - Australia) Silver Lake Resources (ASX: SLR) has brought its second gold mining operation in Western Australia into production with first gold pour at its Murchison Gold Project.
"With the Murchison gold operations now in production we have achieved another major milestone in our strategy," managing director Les Davies said.
"Our strategy since inception was to develop large production centres at Mount Monger and at the Murchison with multiple mines at each centre.
"We now have two production centres and three mills operating with an annualised capacity of 3.3 million tonnes being fed from multiple ore sources.
"We look forward to progressively ramping up production from the Murchison gold operations for the remainder of this financial year then to ~100,000 ounces per annum in FY14.
Murchison Gold Project
The Murchison gold operations consists of multiple mines feeding a central 1.2 million tonne per annum processing facility and has a current resource of 20.5 million tonnes at 2.9 grams per tonne gold for 1.9 million ounces of gold.
The base case production plan has ore being sourced from 14 open pit and four underground mines at various stages over an 8 to 10 year mine life.
Allowance has also been made in the design of the gold processing facility for the later addition of a base metals grinding and recovery circuit.
The plant has a 10.2 megawatt diesel fired power plant that more than exceeds the 7.5MW required to operate the crushing and milling circuit.
Meanwhile, crushing capacity exceeds required milling rates with the crushing circuit capable of producing 250 tonnes per hour.
The circuit has been running at this rate consistently since commissioning was completed.
The name plate capacity of the 2.9 megawatt, 1.2 million tonne per annum ball mill is 135 tonnes per hour.
The gravity circuit is not yet tied into the process flow and will be tied in and commissioned next month.
The remaining construction requirements for the processing facility are being completed concurrently with the commissioning activities.
Following practical completion the project will be handed over to the operations team who will progressively transition from commissioning to full scale operations.
Silver Lake
Silver Lake currently has JORC Resources of 6.6 million ounces of gold and 1.8 million ounces of reserve.
In addition, it holds JORC Resources of 10.4 million ounces of silver and 140,000 tonnes of copper.
Nearby to the Murchison project is the Eelya Complex, which is prospective for gold and base metals.
A high grade copper/gold discovery has already been made at the Hollandaire deposit which contains copper, gold & silver. A pre-feasibility study is underway at Hollandaire.
Silver Lake is also targeting sustained production of 300,000 ounces per annum at its combined Mount Monger projects and has a commitment to long term exploration targeting 10 million ounces of gold over time.
Analysis
Proactive Investor's view this week was the retracement in the SLR share price had been overdone as Silver Lake remains debt free and has 10,229 ounces forward sold at $1,364 per ounce to deliver in the March 2013 quarter to close out the hedge book that came with the Integra transaction.
Current prices afford the value investor an opportunity to acquire a company at well below its intrinsic and fair value.
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