Crescent Gold nears production Down Under

LAVERTON MINE TO POUR GOLD BY YEAR-END

Vancouver — Three years of growing the gold resource and completion of a feasibility study sees Crescent Gold (cra-t, cegdf-o, cre-a) ready to move its Laverton gold project, located in the Eastern Goldfields of Western Australia, into production.

Having recently secured A$25 million ($21 million) in project financing commitments, the company is proceeding with development of mining operations at Laverton. The finance offer, from Investec Bank (Australia), includes a A$20-million ($16.8 million) project gold loan (about 27,000 oz.) with a A$5-million cost overrun provision, a A$5-million ($4.2 million) cash loan to purchase gold puts and diesel cost caps, and a gold hedge facility, if needed.

Laverton is expected to produce about 90,000 oz. gold annually from an open pit over an initial 4-year mine life with total operating costs projected at US$436 per oz. Capital spending of A$15.4 million ($13 million) for the restart and expansion phase will see an internal rate of return of 99%, generating revenue of about A$96 million ($80.8 million).

Recently revised reserve estimates for Laverton give the project a 22% boost over last year’s calculation. Probable reserves now stand at 6.2 million tonnes grading 1.8 grams gold per tonne, totalling about 358,000 contained ounces. Indicated resources have increased to 18.7 million tonnes at 1.5 grams gold (contained gold up 47% to 877,000 oz.) while inferred resources are up to 11.4 million tonnes of 1.5 grams gold for 539,000 contained ounces.

Nine deposits (Sickle, Fish, Euro, Admiral Hill, Mary Mac South, Grouse, Castaway, Lord Byron and West Laverton) have been earmarked for mining at Laverton, scheduled to begin by year-end. A central plant with capacity of 1.5 million tonnes per year (following the addition of a planned second ball mill in early 2007) will process the ore with conventional gravity and carbon-in-pulp technology.

Recent drilling by Crescent Gold has returned a number of higher-grade intercepts on its Laverton land package. At the Fish deposit, several reverse-circulation holes cut intervals up to 7 metres grading 6.4 grams gold and 3 metres of 6.7 grams gold in the hunt for high-grade, lower-cost reserves. At Crescent Gold’s Bell prospect, a number of shallow intercepts ranging from 1 metre to several metres returned grades ranging from 2 to 6.9 grams gold over 400 metres of strike length. Bells is interpreted to be on the same structure as the past-producing Ida H deposit (180,000 oz. at an average grade of 22.8 grams gold).

Additionally, drill testing of a 6-km-long copper-gold soil anomaly adjacent to the Admiral Hill deposit intersected a 3-metre interval of high-grade mineralization averaging 4.5% copper, 4.2 grams gold and 60 grams silver per tonne, including a 1-metre section of 11.5% copper, 12.6 grams gold and 154 grams silver. The mineralization occurs beneath the oxide gold deposit scheduled for mining by the company.

“We are confident that when recent drilling results are accounted for, reserves will be pushed even higher by year-end — coinciding with our production startup,” said Crescent Gold’s managing director, Andrew Haythorpe.

With 218 million shares outstanding, the company posts a $65-million market capitalization given its recent trading level around 30 per share. Listed on the TSX earlier this year, the stock has traded between 16 and 55.