problems questions and answers Fiscal 2011/2012.
Problems
We are already in shortfall on the production guidance given. To re-establish the situation requires DM monthly production for remainder of year Au 1,080oz, Ag 39,700ozs and Cu 1.189mmlbs. EVBC production Au 5,660ozs, Cu 404,000lbs. If these rates cannot be maintained, the production need rises further. The principal reason is that throughputs have been 30% below capacity. Also, if DM sulphide ore could be put through the flotation plant at a rate of at least 1,800tpd as I asked about in last mail, then could expect Au 13,240 ozs, Ag 525,000 ozs Cu 12.7mmlbs, provided that quantity of sulphide could be accessed. On this basis questions were asked:
Questions
Can extra shifts be worked to remedy these defects, and if so, should they not be?
Can enough sulphides actually be accessed to have a strong financial effect, and how?
The AGM did not address the problems in any depth. In my view on 15 March could not Management state the reasons for their confidence that the figures above will be achieved and their individual commitment?
. Shareholders need to have the same confidence that production can be pushed up and costs down, otherwise all confidence will evaporate along with the share price and the Copperwood promised land.
Answers
The forecasts as they stand look most difficult to achieve, but guidance has not been re-stated because gold grade is steadily improving at EVBC as we are moving on the faces with higher ore grades. We have had serious bottlenecks underground with shaft waste, development material and ore haulage. Only the completion of the shaft has reduced hauling by 25 trucks/day and finally haulage distance will be cut by 80%. An extra shift is being set on. I want to see the effect of these improvements in Q2 results before restating.
At UMZ we are now into transition ore which is 50% of Cu as sulphide and have been putting this through the flotation plant. The indications are that this will increase gold recovery over what it would have been on the LPF process not followed by CIL. We can accelerate the mining quickly at a low cost by moving through the oxide ore and stockpiling it, thus enabling us to feed up to 2000tpd of transition to the mill. Very experienced consultants working to make all this happen as soon as possible.
Changes in Board and executives dedicated to make things happen
Costs are coming down, viz EVBC in quarter 4 to $710/oz net