Gold One International , the Australian and African gold producer, has reported a 22% increase in its March quarter gold production to 26,188 ounces.
The increased production output is a result of increases in volume and grade from Modder East. Recovered grades increased to 6.55 grams per tonne, resulting in a 29% increase in gold production from Modder East to 26,023 ounces in the three months to end March 2011.
Group gold revenue at $35.42 million was 21% higher than the previous quarter due to the increased output and a slightly higher gold price of $1,384/oz received. Cash costs for the quarter remained steady at $472/oz despite the strong rand-dollar exchange rate. The total cost, which include cash costs, depreciation and royalties, for the quarter was $659/oz. The company's annual total cost in 2010 was $686/oz.
"I am delighted with the excellent start the company has achieved for 2011," said Gold One president and CEO Neal Froneman, adding that this sets a firm base for the remainder of the year.
A highlight during the quarter was White Water Resources' shareholders approval of the acquisition of Gold One's Megamine assets and the subsequent change of company name to Goliath Gold Mining.
Megamine, located east of Johannesburg, comprises the operating Sub Nigel mine and the Vlakfontein, West Vlakfontein and Spaarwater prospecting areas.
The acquisition was seen as a crucial step toward the creation of Goliath Gold - a new gold exploration and development company - which had a market value of Aus$61.9 million as at end March 2011.
Goliath Gold therefore houses the Megamine assets - a 12 million ounce gold resource - as well as some of White Water's properties, which offer potential additional ounces contiguous to Megamine.
The creation of the new company allowed Gold One to ringfence its shallow low-cost ounces and strong operational cash flows while unlocking value in Gold One's deeper resources. Gold One will ultimately hold a 71% stake in the new company.
At Modder East, Gold One's flagship operation, the company received formal notification that is had been granted a Water Use Licence following the end of the quarter.
During the June 2011 quarter, the first phase of Modder East's exploration programme is expected to be completed and, pending the outcome of drilling results, may be continued and/or the findings thereof incorporated into an updated resource and reserve estimation.
Despite the very significant number of public holidays over the Easter period, the outlook for the June quarter remains positive with the company anticipating an increase in production output to 28,000 ounces.
"Our annual target of 120,000 ounces at average cash costs of US$417 an ounce remains firmly intact," said Froneman.
