Crocodile Gold unveils guidance and exploration program

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 additional contributions coming from the Brocks Creek and Tom’s Gully underground mines. Its 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.

At the moment, ore is being extracted from the Howley open-pit mine and the Brocks Creek underground mine and 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 work started in the first quarter of 2010 and currently development of the access ramps is underway to access the higher grade ore. The mill at Tom’s Gully is expected to restart during the third quarter of this year.

In the meantime, dewatering of the former open pit is progressing well at the Cosmo underground development project. Ramp development to access the underground ore body likely will start by the beginning of the third quarter of this year and production by the beginning of the third quarter of next year.

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 per tonne for 3.09 million oz. contained gold. In the inferred category the company has 26.7 million tonnes at an average grade of 2.3 grams gold per tonne for 1.94 million oz. gold.

At presstime in Toronto Crocodile Gold was trading at $1.70 per share. Over the last year it has traded in a band of 3.5¢-$2.40 per share and has 155.96 million shares outstanding.