Citigold Corporation (ASX:CTO) has today released its half yearly financial report for the six months to
December 31, 2008.
Importantly, net operating cash flow was $3.0 million compared to a loss of $1.8 million in 2007. This is the first time since the Warrior operations begin in 2006 that It has generated a positive cash flow and with production planned to grow in 2009, the company expects this amount to increase to the stage where the Consolidated entity as a whole became cash flow positive.
Highlights of the period:
- Revenue increased 15% to $7.4m, on gold sales of 6,529 ounces
- EBITDA of $663,302, up 400%
- Gross profit of $3,491,111 for the half year.
- Company remains loan debt free and unhedged.
- Current assets remain above $5 million.
- Capital raising with Dubai Group.
- Over $3 million cash generated from operating activities.
- Net Assets up over 5% to $197 million
- Operating Activities generated over $3 million surplus cash
- Independent experts confirm Resource, Reserves and mine plan
Citigold Managing Director, Mr Mark Lynch, said “Citigold’s first half operating results are a good result for the Company. It shows that the Company has strong asset backing, a very healthy and improving profit margin coupled with a clear plan to grow production through the current capital works program.”
“Gold mining is a great business to be in during these turbulent times and we will continue to manage the company prudently while we focus on unlocking the enormous value of the gold asset at Charters Towers for the benefit of shareholders.”
“The number of million ounce plus gold deposits being found world wide is decreasing. Gold prices are trending up and Citigold's fundamentals are strong including a 10 million ounce Resource, free of bank debt, unhedged, in production with an improving cash flow. Citigold is well-placed to take maximum advantage of growth in 2009 and beyond.”
Mine operating costs increased 18% to $3.9 million for the period reflecting the cost pressures being experienced across the industry. These costs have started to reduce due to the slow down in the world economy and it is anticipated the Mine operating costs will continue to reduce on a per unit basis as production increases.
During the period two leading independent consulting groups were commissioned by Citigold to review the Mineral Resources and the Ore Reserves and Mine Production Plan. The Snowden Group reviewed and supported the JORC consistent Mineral Resource reported by Citigold and Coffey Mining reviewed and supported the Ore Reserves and Mine Production Plan and targets.
Also of significance was the removal of a major restriction to the increasing of production and scaling up of the mining operations, with the completion of a 3 megawatt power upgrade and moving to a 24-hour, 7-day per week operation. Therefore the underground capital works program could be accelerated and increased gold production as the program is completed in 2009.
Increasing gold production in 2009
The focus of the half year operations was to expand the size of the underground mine workings. Because of the capacity constraints in the underground due to the power shortages in 2008 the capital works program was delayed. However, with expansion of the Western decline now well underway we expect gold production to grow in calendar year 2009.
The focus on expanding the infrastructure at the mine (power, ventilation, and access) to support a program of capital works was completed in 2008. The capital works program should lead to increased gold output later in 2009 by opening up the Warrior reef along strike and enabling access to two additional reefs, the Sons of Freedom and the Imperial reefs.
Some of the mining highlights during the period included:
- Advance per day exceeded 8 metres for majority of period, above the Australian average.
- Total underground advance increased by over 26%.
Exploration highlights:
- 10 million ounce gold resource confirmed by independent experts.
- Gold mineralisation potentially extended 700 metres vertically to 1,900 metres depth by deep hole.
- Geological model of deep gold structures proven by deep hole.
- Geophysical techniques tested with promising results
During the period the knowledge and confidence of the potential of the Charters Towers goldfield was further increased with the deep hole extending the known depth of mineralisation. Additionally, successful reviews were completion on Citigold’s JORC compliant 10 million ounce gold resource by Snowden Group and the mineable reserves and mine plan by Coffey Mining.
Company outlook
With the ramping up of production at the Warrior mine and record Australian dollar gold prices, 2009 looks to be the year and point of inflexion at Citigold.
The advancement of the Western decline will provide the planned access to additional gold reef mining areas from the current workings. These reefs are the Imperial reef and the Sons of Freedom reef. These additional reefs will assist ramping up production and reducing per ounce production costs by providing additional simultaneous mining areas, increasing tonnes of ore mined and improved underground machine usage efficiencies.
Citigold has the largest high grade gold deposit in Australia through the 100% controlled 10 million ounce gold resources at Charters Towers. Production to date has been at a comparatively low cost with the cash costs being below $500 per ounce and revenue currently above $1,400 per ounce.