Preliminary production results from Claude Resources’ (CRJ-T, CGR-N) Seabee Gold operation in Northern Saskatchewan are in and the results are better than expected.
Claude managed to turn out 15,100 oz. of gold from Seabee in the quarter by milling 66,173 tonnes of ore at a head-grade of 7.27 grams per tonne.
The production total represents a 24% increase over second quarter results and the company says it is on target to meet its production guidance of 48 to 50,000 oz. of gold for the year.
“Higher third quarter production comes as a surprise as we had expected lower production with the tie-in of the Seabee shaft and a planned mill shut down,” CIBC analysts Cosmos Chiu and Barry Cooper wrote in their research report on the results.
The shaft tie-in is related to Claude’s plan to extend its current 600 metre shaft down to 980 metres in an effort to boost operating efficiency.
The company’s ability to beat production expectations and stay on track for its annual guidance has to do with it pushing the closure of the shaft back into the fourth quarter — it says the shaft will be close for five weeks during the quarter — and its plan to not stop milling while the shaft is closed.
Once the shaft extension is finished the access to deeper rock should usher in more production and lower unit costs.
Chiu and Cooper said the construction could make for a challenging quarter due to the shaft tie-in exercise, but when completed it will give the company the mining flexibility it needs to meet guidance.
“At this time, we continue to view Claude Resources as a wait-and-see story, but are encouraged by some of the progress made in Q3, including accessing of higher-grade ore from Seabee Deep and L62,” the report reads. “Meeting on production guidance and delivery of the shaft tie-in in Q4 remain key.”
The analysts expect cash costs for the quarter to be roughly US$750 per oz., which would be a significant improvement on the US$1,143 per oz. costs realized in the first half of the year.
Claude says that its full operating and financial results from the third quarter will be released on November 14.
In Toronto on Oct. 3 the company’s shares were off a penny to 78 cents on 98,000 shares traded.
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