Production up 65% in Q3 at Castle Gold’s El Castillo

New mining equipment delivered in the third quarter allowed Castle Gold (CSG-V) to reach record production levels at its El Castillo mine in Mexico, despite mining lower grades as part of its mine plan and the challenges it encountered maintaining gold solution grades on the leach pads during the rainy season.

During the three months ended Sept. 30, mining rates averaged 865,000 tonnes per month, more than double the production rate in the same quarter a year ago and nearly 40% above the rate in the second quarter of this year.

New, larger and more efficient contractor supplied and operated mining equipment sent gold production in the third quarter to 7,655 ounces of gold, a 65% increase from the year-earlier quarter of 6,421 ounces.

The gold mine in Mexico’s Durango state also achieved a new record for total tonnes mined, with 2.59 million tonnes of combined ore and waste, a year-on-year increase of 109% and a 39% increase from the second quarter of this year.

Looking ahead, Castle Gold’s management believes it can reduce its waste to ore ratio to 0.6-0.55:1 in the second half of 2010. (The ratio was 1.4:1 in the third quarter.)

In September Castle Gold’s board of directors approved a US$1.3 million investment in the engineering, purchase and construction of a portable screening plant to screen out the fine fraction (material less than three quarters of an inch) of the high-grade ore that would otherwise pass through the contractor operated screen-crusher plant prior to being stacked on the heap leach pads. The new plant is expected to be operational in the first quarter of next year.

In the meantime, Castle Gold is drilling to the south of the currently known El Castillo open-pit gold reserves to boost resources and reserves. In its Phase 1 resource expansion drill program, 17 of 19 holes intersected mineralization in excess of the current resource cut-off grade being used to calculate resources and reserves.

Castle Gold is close to completing its recalculation of gold resources, after which the company will discuss Phase II drilling.

In addition to its El Castillo gold mine in Mexico, Castle Gold has a 50% stake in the El Sastre gold mine in Guatemala.

The gold producer is also advancing exploration and development work at its La Fortuna gold-silver-copper project in Mexico and at its El Sastre and El Arenal projects in Guatemala.

At presstime Castle Gold was trading at 81¢ per share. In the last 52 weeks the stock has traded in a range of 15¢-83¢ per share.

The company has 75.5 million shares outstanding.