Barrick and MDN getting the cash from Tulawaka

Northern Mining Exploration (MDN-T) continues to receive healthy cashflows from its share in the Tulawaka Gold Mine in Tanzania

The junior, which also holds exploration ground in the area surrounding the mine, reported that total production from the mine came in at 29,489 oz. of gold for the third quarter.

Of that amount, 28,373 oz were sold into the spot market at an average price of US$948 which brought total sales for the mine to US$26.9 million.

MDN has a 30% in the project with the mine’s operator – Barrick Gold (ABX-T, ABX-N) — holding the remaining 70%.

MDN commended Barrick for its work on improving underground mining operation and said production came in above forecasts.

“Based on the ongoing mining activities and the favorable gold market conditions, the future looks good for Tulawaka,” MDN’s chief executive Paul Girard said in a statement.
Since opening in March of 2005, the mine has turned out 717,868 oz. of gold.

While only 39,969 tonnes of ore were mined in the quarter (at an average grade of 16.5 grams gold) the plant managed to process 115,236 tonnes of ore at an average grade of 8.5 grams gold with a recovery rate of 94.2%.

The large difference between tonnes mined and tonnes milled came from the fact that the companies had a large amount of stockpile to work through…and still do.

MDN says the mine finished the quarter with stockpiles of 262,390 tonnes grading 2.45 grams gold. That represents roughly 9 months worth of ore supply for the process plant, assuming a throughput of 30,000 tonnes per month.

Cash costs for the quarter came in at US$375 per oz.

Tulawaka sits roughly 1,000 km the Tanzanian capital of Dar es Salaam and 120 km west of Barrick’s Bulyanhulu mine.

For the first nine months of the year 103,778 tonnes were mined from the underground mine at an average mine grade of 15.3 grams gold and the plant processed 325,666 tonnes of ore grading 7.6 grams gold.

The mine is MDN’s main source of cash flow and there has much investor anticipation around whether the company would try to acquire other gold projects with such an enviable stream of funds flowing into its coffers.

For the time being the company has been content to take a 29% interest in the Lac St-Jean niobium and tantalum property in Quebec.

In Toronto on Oct. 19 the company’s shares finished 4% higher at 70¢ on 1.2 million shares traded while Barrick shares finished 8¢ lower at $40.11 on 3 million shares traded.