Aurizon looks to lower Casa Berardi costs

Gold production was up during the first quarter of 2008 at Aurizon Mines‘ (ARZ-T, AZK-X) Casa Berardi underground mine in Quebec, but the company reports that it will strive to lower production costs going forward.

Aurizon president and CEO, David Hall, says that production of 42,000 oz. gold at an average grade of 8.6 grams gold per tonne this quarter has put the company on track for the year. Total production costs were US$613 per oz. gold or $24.5 million.

“At this point we are maintaining our production forecast of 160,000 ounces of gold per year at a cash cost of US$400 per ounce,” Hall said during a conference call today.

Hall said the company expected this quarter would be the worst for costs but said that,”It turned out a little worse than we thought.”

The company reported that cash costs were at US$422 per oz., up from US$402 in the fourth quarter, plus another US$191 per oz. included under depletion, depreciation and accretion amortization for total cost per oz.

“The increase in mining costs was due to a higher ratio of drift and stop development charged to operations in the first quarter,” Hall said.

The company reported that it paid down its debt facility by $26.7 million over the quarter leaving it with $22.7 million owing.

Cash flow increased 30% over the fourth quarter of 2007 to $15.6 million and the company reported a net loss of $3.8 million over the period and adjusted net earnings of $3.3 million.

Revenue from the mine totaled $35.1 million from the sale of 39,600 oz. gold and 8,000 oz. silver and the company realized an average gold price of US$877 per oz.

Aurizon plans to spend $20 million on exploration in 2008 with half going to Casa Berardi and the remainder to its Joanna gold property. The company will be releasing a scoping study on the property in the next few days.

Aurizon will also consider a drill program for its new O’Brien property, a 50% joint venture with Radisson Mining Resources (RDS-V), towards the end of the year.