Crew looks for savings from Newfoundland plant

Savings should be coming to Crew Gold (CRU-T, CRUG.PK-O) quicker than anticipated as refurbishments at its Nugget Pond processing plant are ahead of schedule.

The accelerated timeframe means ore from its Nalunaq gold mine in Greenland can be processed as early as February of this year, ushering in savings of $2 to $3 million per year, the company says.

Back on Oct. 30 Crew announced it was acquiring the plant in Newfoundland as a long term solution for processing ore from Nalunaq –which is currently being processed at Rio Narcea‘s (RNG-T) el Valle Plant in Spain.

Crew paid New Island Resources (NIS-V) 3 million of its shares for the plant, and gave New Island the right to process ore at the plant from its surrounding licenses at commercial rates. Crew estimates the cost of refurbishment to be $8 million.

Crew owns 82.5% of Nalunaq, where commercial mining began in 2004, and produced 75,000 oz of gold in 2006. The mine is the first gold mine in Greenland, and the first new mine in the region in 30 years.

Nalunaq has an indicated resource of 440,000 tonnes with an average grade of 21 grams per tonne for 294,000 oz. of gold and an inferred resource of 3.3 million tonnes grading 18 grams per tonne for 940,000 oz. of gold.

The company plans to ship ore through South Brook, Newfoundland and truck it to the plant until a dedicated unloading facility at Snook’s Arm is constructed by the middle of this year.

In Toronto on Jan. 5, the Surrey, Englandbased company’s shares were off 2 to $2.32 on roughly 18,000 shares traded largely attributable to the price of gold dropping a hefty US$18.05 to close at US$605.10 for the day.

The Nugget Pond plant had been run by Montreal-based Richmont Mines (RIC-T) between 1997 and 2004.

Crew says the plant will give it greater control over Nalunaq by reducing cash costs, reducing working capital needs through more regular ore processing and will help it grow in Canada through a joint venture with New Island Resources.

Crew also announced that its efficiency program at Nalunaq is improving productivity and moving it closer to its targeted production of 500 to 550 tonnes of ore per day.