During the quarter, mining continued as planned in lower grade areas of A Hill and K West with 1,329,800 tonnes of ore mined at a strip ratio of 2.8:1 (previous quarter 2.5:1). Mining at K West was completed in October. Mine production continued at full capacity despite the heavy wet season that ended in November. However, managing the prolonged and heavy wet season meant delaying access into higher grade areas such as C North where difficult conditions have been experienced in the past. Operations at A Hill were constrained by a night curfew to reduce noise effects on the local community however, following the completion of K West, additional equipment was mobilized to A Hill to compensate for the limited operating hours. Mining of A Hill Stage 2 advanced while access to higher grade areas was not available. Some preparatory work was able to be undertaken in these areas prior to an expected start in January 2011.
Mining at C North has been delayed while regulatory approvals are finalised following the relocation of the highway which was completed during the quarter and recently approved by the Highway Department. Mining at C North is now scheduled for February 2011.
The process plant treated 649,000 tonnes of ore at an average plant head grade of 1.2 grams/tonne gold to produce 21,451 ounces of gold. Silver production was 151,167 ounces. Gold recovery of 88.1% was slightly lower than the prior quarter of 89.0% due mainly to the ore type currently available to mining activity. Recovery is expected to improve over the next three to six months.
Cash costs decreased to US$458/ounce (US$341/ounce before Thai royalties) for the quarter with total production costs after depreciation and amortisation of US$561/ounce. These costs continue to place the mine in the lowest quartile of global gold producers (Source: GFMS).
Stockpiled ore at close of quarter was 7,190,155 tonnes at 0.72g/t containing 167,047oz gold.
SAFETY, ENVIRONMENT AND LOCAL COMMUNITY
Chatree continues to be the world's safest gold mine, based on publicly available data, having achieved 15.6 million hours worked (almost 8 years) since the last and only Lost Time Injury (LTI) and over 17.7 million hours worked over ten years with one LTI since the commencement of mine construction in the year 2000. This Lost Time Injury Frequency Record (LTIFR) of zero compares favourably to the Australian industry average LTIFR of 2.9 (Minerals Council of Australia Jun 2009) and to Canada's Ontario province industry average of 5 (Jun 2008 data). There have been no reportable environmental incidents during the life of the mine and it remains in compliance with all environmental regulations.
Gold production in the December quarter was 21,451 ounces and in line with the September quarter due to mining lower grade areas of A Hill and K West pits. While this production level was expected from these mining areas, final government approvals to mine the higher grade C North pit adjacent to the highway relocation was not forthcoming in December, as budgeted. It is now expected that mining will commence in C North in February 2011.
Gold production in the second half FY2011 will be higher than the first half in line with plan however, the delay in accessing C North has reduced the forecast production range for FY2011 to 110,000 to 120,000 ounces of gold.
CHATREE NORTH PLANT EXPANSION PROPOSAL
Construction of the new Chatree North processing plant was approximately 60% complete at the end of December and remains on schedule and budget. As at 31 December, $56 million had been expensed on the expansion. The plant is being constructed as a separate 2.7 million tonnes per annum (Mtpa) ore processing plant located beside the current 2.3Mtpa Chatree processing plant. This will result in a combined total ore processing capacity over 5Mtpa with a potential gold production rate of over 200,000 ounces per year.
During the quarter, significant progress continued in all areas despite heavy rain at the end of the wet season. Welding was completed on the Leach and CIP tanks and the Ball and SAG mills were assembled and are in place. Civil works for the crusher and reclaim are well progressed.
Practical completion and the first gold pour are expected in the September quarter 2011.
Construction of the new conference and visitor centre at Chatree was completed during the quarter.