CGA Mining Limited - December Quarterly Report

CGA ANNOUNCES PRODUCTION BACK TO FULL CAPACITY AND CONTINUED STRONG EXPLORATION RESULTS

DECEMBER QUARTERLY REPORT

ANNOUNCEMENT TO THE TORONTO STOCK EXCHANGE AND AUSTRALIAN SECURITIES EXCHANGE
30 JANUARY 2012

/NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR RELEASE TO US NEWS WIRE SERVICES/

PERTH, Western Australia, Jan. 30, 2012 /CNW/ -

HIGHLIGHTS

  • SAG mill repair completed and production at the full capacity of 6.5mtpa
  • Front End Engineering and Design for 10mtpa expansion nearing completion and Optimisation Study awarded to Lycopodium
  • Quarterly gold production of 27,820oz (September Q 14,936oz) at cash operating costs of $832/oz (September Q $1,167/oz) - affected by the SAG mill
  • Cash and liquid assets as at 30 September 2011 were US $144.3M
  • Exploration program continues to produce strong results - 16,301m of drilling in the quarter, including:

    14m at 6.15g/t
    19m at 3.64g/t
    23m at 5.44 g/t
    35m at 2.57g/t
    32m at 3.56g/t, and
    90m at 1.27g/t
  • 7 exploration drill rigs operating on site and an eighth to arrive shortly
  • Summary of significant drilling intersections for the quarter:

Hole-ID Intercept width Grade Depth
MV003 21m 1.64g/t From 155m
MV010 10m 1.17g/t From 167m
PQRC020 59m 1.22g/t From 84m
PQRC022 14m 6.15g/t From 60m
PQRC025 13m 2.85g/t From 102m
BQRC020 15m 1.96g/t From 37m
LERC021 19m 3.64g/t From 65m
LERC022 32m 3.56g/t From 107m
LERC024 23m 5.44g/t From 103m
LERC032 90m 1.27g/t From 192m
AQDD002 38m 1.42g/t From 109m
AQDD005 19m 2.16g/t From 110m
AQDD005 32m 1.05g/t From 133m
ODRC031 19m 1.68g/t From 12m
ODRC038 35m 2.57g/t From 85m
ODRC039 10m 1.10g/t From 52m

MASBATE PROJECT UPDATE

  Ore Mined
(t)
Average
Grade
Mined
(g/t Au)
Ore Milled
(t)
Head
Grade
(g/t Au)
Recovery
(%)
Plant
Availability
(%)
Total
Production
(oz Au)
Cash
Operating
Costs
(US$/oz)
December
Quarter
1,223,845 1.02 866,140 1.10 90.6 87.7 27,820 832
September
Quarter
495,127 0.91 566,938 0.92 89.2 77.7 14,936 1,167

Processing

SAG mill repairs were completed during December with the re-start occurring on 25 December and full production being achieved before the end of the December month. At month end the mill was operating at an annualised rate of 6.5mtpa with all operating parameters within normal ranges.

All repair design, weld supervision, testing and quality control, alignment and re-commissioning were conducted under the supervision of METSO Australia. The repair work included the welding of the cracked joins using an improved weld procedure and the installation of 72 strengthening gussets to each end of the mill to further enhance the mill design and integrity.

The process plant milled 1,223,845 tonnes of ore at 1.02g/t (495,127 tonnes at 0.91g/t for the September quarter) to produce 27,820 oz (14,936 oz in September quarter). Recovery was 90.6% (89.2% in September quarter) reflecting the high oxide component of the feed and extended residence time in the leach tanks due to the low throughput.

Availability of 87.7% was adversely affected by the changeover work required to remove the temporary bypass conveyor to enable the SAG mill to be re-commissioned.

Cash costs per tonne milled dropped to $25.66 /t compared to $37.08/t in the September quarter primarily due to the improved throughput once the supplementary crusher was brought on line.

Cash operating costs also reduced to $832/oz from $1,167/oz in the September quarter due to the increased production due to improved throughput and grade compared to the previous quarter. This is expected to reduce further now the SAG mill has been brought back online.

Safety

There were no Lost Time Injuries in the quarter with the site achieving 216 injury free days for a LTI frequency rate of 0.18.

Mining and Geology

Mine production of 1,650,383 BCM (817,770 BCM in the September quarter) produced 1,223,845 tonnes of ore (495,127 tonnes in the September quarter) from the HMB East, Binstar and Main Vein pits.

Mining volumes and ore production had been reduced over the September and December quarters to match the reduced throughput of the processing circuit. By quarter end, the mining fleet had been brought back to full capacity to maintain ore to the mill.

Scoping Study - 10Mtpa Expansion

Work on the comprehensive scoping study to lift production rates to 10mtpa is well advanced and continues to track well. The FEED (Front End Engineering and Design) Study, which is being run in parallel with the final report, continues to prove up the process stream.

Optimisation Study

Due to the successful impact of the supplementary crusher on throughput rates, an Optimisation Study has also been awarded to Lycopodium. This study will review the current crushing and grinding circuits to understand what throughput can be achieved by upgrading the crushers and mills within the existing foundations and footprint. This study is being run in parallel with the FEED study. The optimisation study has the potential to materially reduce the up-front capital cost of the expansion and would better utilise the existing circuits.

Exploration and Near Mine Resource Drilling

Summary

Drilling this quarter was largely confined to the Mining Lease area targeting resource infill and upgrade at Panique, Libra East, Main Vein, Colorado, Blue Quartz, and Aquarius. Exploration drilling was undertaken at Colorado East. A total of 9,283m of Reverse Circulation and 7,017m of diamond core drilling were completed. Excellent results were returned from drilling at Libra East, Main Vein, Aquarius, Panique, and Old Lady prospects indicating a strong possibility of defining additional resources at these prospects. Regional mapping and sampling continued this quarter and this program has successfully located a number of promising new prospects that have yet to be fully evaluated.

7 exploration drill rigs are currently operating on site and an eighth, which has deep hole capability, scheduled to arrive shortly.

Drilling Activities

At Panique, an intensive reverse circulation drilling program has been in progress this quarter with 63 holes (6,963m) completed with the aim of upgrading the northern strike extent of four of the Panique vein sets from Inferred to Indicated resource status.

Main Vein North Split diamond core drilling has been in progress this quarter with 4 holes completed (118.3m). There is potential to add resources at depth below the current pit design as drilling done to date has not closed off the mineralisation.

Planned drilling at Libra East was completed this quarter with 4 diamond tails holes for 510.4m. Assay results received to date indicate high potential for depth and strike extensions of Libra East.

At Colorado the current drilling program is designed to infill previous wide spaced drilling. This quarter 14 RC holes ( 1,333.2m) were completed, six of these holes required diamond core tails (533.4m).  Current pit design has been limited to the depth of the pre-existing drill holes.

At Aquarius 12 core holes were completed this quarter (2,904m). The Aquarius vein lies between HMB W and HMB E. The mineralised zone is ~150m strike and up to 50m wide grading 2 - 3 g/t Au.

The Blue Quartz resource drill out program has largely been completed. A program to drill a further 7 holes in the main zone and further additional drilling (34 holes, 4,525m) planned to test the eastern strike extension of the Blue Quartz vein system up to the western extent of the Old Lady prospect was commenced this quarter.

The Main Vein - Binstar Deeps program to test for depth extensions of the mineralised veins below the planned pit floor has now shifted to the northern end of the Binstar pit and 6 holes were completed this quarter for 1,878.8m.

There was no drilling carried out at Old Lady prospect this quarter. A further 8 holes have been designed to infill the Old Lady resource next quarter.

At Colorado East 8 holes (832m) were completed to test 200m strike of the Colorado East vein. Intersections of up to 25m of mineralised quartz vein material were noted. No assay results were received during the quarter.

Regional Mapping & Sampling

The regional mapping team continued working towards the south of Exploration Permit area covering an additional 7km2 this quarter.  A total of 517 stream and 171 rock chip samples were taken.

Table of Significant Drilling Intersections Received for the Quarter

Hole-ID Easting Northing RL Azm Dip Total Depth From To Down
Hole
Width(m)
True
Width
(m)
Grade
(g/t)
Comments
MAIN VEIN NORTH SPLIT                    
MV003 30300.8 25266.19 1079.94 340 -60 243.5 70 75 5 3 1.55  
              84 99 15 8 0.88  
              155 176 21 13 1.64  
MV004 30246.59 25245.71 1080.37 238 -54 311 21 32 11 6 1.48  
              36 44 8 5 1.26  
              59 75 16 10 0.91  
              105 110 5 3 2.96  
              123 132 9 6 0.48  
              223 231 8 5 0.62  
MV005 30327.3 25307.16 1080.04 340 -60 155 48 51 3 2 1.88  
              150 154 4 3 1.73  
MV006 30322.26 25222.81 1079.8 340 -60 350.2 24 26 2 1 1.03  
              154 163 9 6 1.65  
MV010 30279.665 25228.162 1080.195 303 -60 446.2 21 25 4 2 3.58  
              38 42 4 2 1.46  
              176 186 10 6 1.17  
              310 318 8 4 0.61  
              326 337 11 6 0.94  
              347 351 4 2 1.13  
              360 369 9 5 0.48  
              374 381 7 4 0.7  
              432 442 10 6 0.58  
MV011 30361.73 25125.694 1080.258 230 -56 224.2 28 39 11 7 1.59  
              94 97 3 2 3.58  
              105 128 23 13 0.96  
              131 140 9 7 0.52  
              155 161 6 5 0.7  
PANIQUE                      
PQRC003 30200.32 25006.01 1150.52 338 -50 92 1 4 3 1 3.56  
              10 12 2 1 12.01  
PQRC004 30219.7 24970.21 1150.13 93 -55 196 123 132 9 5 3.17  
              135 143 8 5 0.61  
              178 192 14 8 0.74  
PQRC006 30208.84 24984.32 1150.27 270 -60 85 63 67 4 2 1.03  
PQRC007 30201.23 25007.31 1150.51 27 -72 146 135 139 4 2 1.17  
PQRC008 30201.194 25007.493 1150.383 8 -85 144 76 83 7 3 0.57  
              90 102 12 5 0.92  
PQRC009 30231.403 24984.08 1150.625 270 -71 124 13 18 5 2 0.99  
              30 39 9 5 0.48  
              56 60 4 2 0.99  
              74 78 4 2 0.54  
              97 108 11 8 0.78  
PQRC010 30238.242 24967.884 1150.409 93 -55 166 4 7 3 2 0.58  
              32 46 14 7 0.65  
              109 129 20 10 0.61  
              134 145 11 6 1.2  
              160 174 14 7 0.75  
PQRC011 30200.316 24875.477 1150.634 19 -60 90 48 54 6 3 0.49  
              62 65 3 2 1.56  
PQRC012 30216.83 24893.754 1150.643 235 -60 121 52 59 7 6 1.06  
              73 81 8 5 7.49  
PQRC013 30241.225 24939.992 1150.606 95 -57 156 41 46 5 3 1.03  
              111 157 45 14 0.66  
PQRC014 30255.393 24948.271 1150.468 270 -77 156 132 138 6 3 1.24  
PQRC015 30245.832 24841.254 1150.745 236 -60 101 18 23 5 3 0.41  
PQRC016 30239.642 24912.853 1150.67 235 -60 154 37 45 8 5 0.88  
              64 98 34 26 0.62  
              137 145 8 5 1.12  
PQRC017 30242.12 24956.89 1150.81 270 -66 124 9 17 8 5 0.8  
              39 47 8 5 0.7  
PQRC018 30196.24 24859.44 1150.67 19 -60 134 23 32 9 4 0.82  
              54 60 6 4 0.66  
              70 100 30 18 0.85  
              104 110 6 4 1.31  
              113 118 5 3 1.29  
              123 132 9 5 0.63  
PQRC019 30255.15 24843.49 1150.55 84 -56 108 15 25 10 6 1.16  
PQRC020 30232.58 24841.42 1150.57 84 -55 157 49 65 16 7 0.53  
              66 81 15 7 0.75  
              84 143 59 20 1.22  
              147 157 10 5 0.72  
PQRC021 30229.39 24865.89 1150.57 235 -60 128 6 12 6 4 0.51  
              63 79 16 9 0.88  
PQRC022 30226.58 24862.11 1150.38 20 -60 88 60 74 14 6 6.15  
PQRC025 30248.86 24832.49 1150.49 17 -60 130 30 36 6 3 0.58  
              102 115 13 8 2.85  
PQRC026 30269.52 24860.61 1149.85 232 -60 154 34 40 6 4 0.83  
              43 48 5 3 0.57  
              58 63 5 3 0.68  
              104 109 5 3 0.67  
LIBRA EAST                      
LERC021 29709.62 25461.51 1099.2 356 -56 112 65 84 19 13 3.64  
LERC022 29708.37 25460.54 1099.16 335 -68 146 107 139 32 15 3.56  
LERC023 29856.49 25344.07 1107.08 36 -63 261 62 70 8 5 0.71  
              102 112 10 6 0.58  
              123 133 10 6 0.83  
              203 210 7 4 0.86  
LERC024 29621.87 25458.11 1072.44 27 -58 123 103 126 23 13 5.44  
LERC031 30110.81 25451.95 1140.13 220 -55 284.4 194 257 63 17 0.98 Assays for 0 -194m
not yet available
LERC032 30005.61 25409.12 1125.13   -90 320.6 1 11 10 2 0.82  
              65 108 43 7 0.99  
              116 143 27 6 0.59  
              148 188 40 10 1.03  
              192 282 90 13 1.27  
              286 319 33 6 0.67  
AQUARIUS                      
AQDD002 29772.393 25915.59 1069.832 27 -25 160.7 109 148 38 35 1.42  
AQDD003 29772.393 25915.59 1069.832 27 -37 193.3 108 152 44 36 0.78  
AQDD004 29772.393 25915.59 1069.832 27 -50 203 47 52 5 3 1.13  
              87 106 19 15 0.57  
              119 128 9 7 0.99  
              140 162 22 17 0.92  
AQD005 29772.393 25915.59 1069.832 10 -40 179 110 129 19 16 2.16  
              133 165 32 27 1.05  
COLORADO                      
COL013 30313.73 26454.89 1153.27 60 -63 210 38 41 3 2 3.38  
              48 54 6 3 1.39  
COL016 30422.4 26289.85 1086.36 60 -55 94 49 52 3 2 1.14  
              61 63 2 1 1.27  
              70 72 2 1 1.27  
COL017 30372.66 26373.9 1111.72 240 -75 120 43 46 3 2 1.1 Assay results from
0 to 46m only recieved
COL019 30531.24 26144.03 1049.68 242 -60 136.8 10 12 2 1 6.68  
COL020 30601.45 25988.95 1040.2 60 -60 143 1 10 9 5 0.97 Results for 99 to
140m awaited
COL022 30530.2 26207.6 1062.76 240 -56 99 45 49 4 3 1.15  
GRANDVIEW                      
GVRC015 29946.95 27483.77 1185.9 75 -72 178 44 48 4 1 0.44  
              73 85 12 2 0.46  
              113 128 15 3 0.66  
              145 153 8 2 0.54  
GVRC022 29875.73 27585.48 1174.55 42 -42 130 57 80 23 7 1.17  
              104 118 14 2 2.69  
              120 136 16 2 1.1  
OLD LADY                      
ODRC029 32072.22 23360.4 1150.05 180 -56 141 47 57 10 5 0.72  
ODRC030 32072.74 23312.76 1145.36 180 -60 75 13 31 18 10 0.67  
              41 47 6 3 0.99  
ODRC031 32021.63 23396.85 1153.31 180 -60 81 12 31 19 14 1.68  
ODRC038 31990 23532.12 1102.64 180 -60 169 85 120 35 26 2.57  
ODRC039 32021.04 23481.48 1118.29 180 -60 161 41 49 8 6 2.4  
              52 62 10 8 1.1  
              63 72 9 7 0.7  
              102 106 4 3 1.32  
BINSTAR - MAIN VEIN                      
BMVDH016             11 18 7 6 2.87  
              31 41 10 9 0.9  
              124 140 16 15 0.87  

CORPORATE

As at 31 December 2011, cash and liquid assets were US$144.3M (September quarter: $174.5M). Cash and bullion on hand represented US$86.7M of that balance - including the cash reserves of Filminera Resources Corporation. This was after having paid the interest and principal repayment on the BNP arranged project finance facility for the December quarter of US$4.4M.  The outstanding project finance facility has now reduced to US$35.5M at 31 December 2011 (September quarter: $39.5M). At 31 December 2011, the Company had 10,771,250 options on issue and the total issued capital was 333,475,726 fully paid ordinary shares.

ABOUT CGA MINING LIMITED

CGA is listed on the main board of the Toronto Stock Exchange and ASX.  The Masbate Gold Project in the Philippines was successfully constructed with first gold poured mid 2009. The project has a total indicated resource base of 4.55M ounces of gold, total inferred resource base of 3.22M ounces of gold and a probable reserve of 3.03M ounces of gold.

The 4Mtpa designed plant was constructed by Leighton Contractors Asia Limited ("Leighton") without one lost time injury. The mining contract for the Masbate Gold Project has been awarded to Leighton, the largest mining contractor in the world. CGA has completed a US$15M investment program designed to upsize throughput to 6.5Mtpa at Masbate. The project is forecast to produce at a rate of over 200,000 ounces per annum (Year ended 30 June 2011: 190,033 ounces).

CGA has an aggressive exploration strategy. It is planned to undertake172,000m of drilling at a cost of US$20M over the next twelve months.

CGA has a disciplined acquisition program focused on acquiring new gold projects with a substantial initial resource with the capacity to grow materially and where the development and operational experience of CGA can be applied to enhance shareholder value.

NATIONAL INSTRUMENT 43-101 AND JORC COMPLIANCE

Mr Mark Turner, BE Min(Hons), M.Aus.I.M.M.CP Man, CGA's Chief Operating Officer, is acting as the Qualified Person in compliance with NI 43-101 and JORC reporting requirements with respect to this announcement. He has prepared and or supervised the preparation of the scientific or technical information in this announcement and confirms compliance with NI43-101 and JORC requirements.

Further information relating to the Masbate Project is included in the technical report entitled Technical Report on the Mineral Resources of the Masbate Deposit, Masbate Province, Republic of the Philippines for CGA Mining Limited prepared by Mining Associates Pty Ltd and available on SEDAR at sedar.com, lodged 8 July 2008.

Andrew James Vigar of Mining Associates Pty Ltd, a qualified person, has verified the resource statement for the Masbate Project as disclosed in this announcement, including sampling, analytical and test data underlying the estimate. Verification of the data included numerous site visits, database validation of historical drill results and review of sampling and assaying protocols.  The qualified person was satisfied with the verification process.

A NI 43-101 compliant report has been lodged on sedar.com verifying and supporting the new reserve statement made for the Masbate Project.  Mr Daniel Tuffin, previously of Lower Quartile Solution Pty Ltd, a qualified person, has verified the reserve statement for the Masbate Project as disclosed in this announcement, including sampling, analytical and test data underlying the estimate. Verification of the data included database validation of historical drill results and review of sampling and assaying protocols.  The qualified person was satisfied with the verification process.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This announcement includes certain "forward-looking statements" within the meaning of Canadian securities legislation. All statements, other than statements of historical fact, included herein including, without limitation, statements regarding milestones related to the Masbate Gold Project, production estimates and CGA's future operating or financial performance, are forward-looking statements.. Forward-looking statements involve various risks and uncertainties and are based on certain factors and assumptions. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from CGA's expectations include uncertainties related to fluctuations in gold and other commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; the need for cooperation of government agencies in the development of CGA's mineral projects; the need to obtain additional financing to develop CGA's mineral projects.; the possibility of delay in development programs or in construction projects and uncertainty of meeting anticipated program milestones for CGA's mineral projects ; and other risks and uncertainties disclosed under the heading "Risk Factors" in CGA's Annual Information Form for the year ended 30 June 2011 filed with the Canadian securities regulatory authorities on the SEDAR website at sedar.com.

 

SOURCE CGA Mining Limited

For further information:

ENQUIRIES
Australian Contact    
President & CEO - Michael Carrick  
US Contact
Independent Chairman - Mark Savage
Tel:  +61 8 9263 4000  
Fax:  +61 8 9263 4020  
Email:  mcarrick@cgamining.com 
Tel:  +1 505 344 2822
Fax:  +1 505 344 2922
Email: marksavage@comcast.net

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CGA Mining Limited

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