Crocodile Gold (CRK-T, CROCF-O) plans to produce 120,000 oz. gold this year at a cash cost of US$650 per oz. and will spend US$23 million on a 40,000-metre drill program to expand its resources in Australia.
The exploration program will involve 90,000 metres of reverse circulation drilling with the long-term goal of boosting Crocodile Gold’s resources to 10 million oz. gold, which would translate into potential annual production of more than 250,000 oz. gold per year, the company outlined in a press release.
More than 70% of the new budget is earmarked for upgrading the resources at Cosmo and Howley, an area in Australia’s Northern Territory covering a 5- km mineralized system, part of a larger 25-km mineralized trend with known resources along its entire length. Additional exploration targets for 2010 include Tom’s Gully, Maud Creek and Iron Blow.
In terms of its 2010 production, 75% of it will come from the Howley open-pit mine, with contributions coming from the Brocks Creek and Tom’s Gully underground mines. The company’s guidance of 120,000 oz. gold is expected to result from processing of 1.8 million tonnes at an average grade of 2.3 grams gold per tonne.
Currently, miners are extracting ore from Howley and Brocks Creek, which is being trucked to the Union Reefs mill for processing. The company poured its first gold at Union Reefs mill in December 2009.
At Tom’s Gully, development started in the first quarter of 2010 and excavation of ramps is underway to tap into the higher-grade ore.
The mill at Tom’s Gully is expected to restart during the third quarter of this year.
Meanwhile, dewatering of the former open pit is progressing well at the Cosmo underground development project. Ramp development into the underground ore-body likely will start by July and production by July 2011.
Crocodile Gold has two mills, including the 8,000-tonne-per-day Union Reefs mill and the 800- tonne-per-day Tom’s Gully mill.
Currently, Crocodile Gold has measured and indicated resources of 42.9 million tonnes at an average grade of 2.3 grams gold for 3.09 million contained ounces. In the inferred category the company has 26.7 million tonnes at an average grade of 2.3 grams gold for 1.94 million oz. gold.
Crocodile Gold’s share price was $1.70 at presstime, trading within a 52-week band of 3.5¢- $2.40.
The company has 156 million shares outstanding.
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