The definitive feasibility study (DFS) at Aureus Mining’s (LON:AUE, TSE:AUE) New Liberty asset has outlined an "economically robust" gold project based on a flat gold price of US$1,400 an ounce.

Aureus added that the DFS has extensively de-risked the project from design, operational and environmental perspectives.

Capital and operating costs are estimated to a higher level of accuracy, the company said, while the DFS has increased the average production profile for the first six years of the life of the mine (LOM).

Based on a base case of a flat gold price of US1,400 an ounce, the New Liberty project in Liberia has a pre-tax net present value (NPV) of US$230mln, giving a pre-tax internal rate of return (IRR) of 29%.

The previous feasibility study based on a flat price of US$1,400 an ounce gave a pre-tax NPV of £225mln and a pre-tax IRR of 32%.

Using an average price of $1,400 an ounce over five years (assuming a sequence of average prices of US$1,600, US$1,600, US$1,500 and US1,300), the NPV rises from the US$234mln announced in the previous feasibility study to US$237mln, and the pre-tax IRR eases to 32% from 37%.

The study projects average annual gold production of 119,000 ounces over the first six years at an average grade of 3.6 grams per tonne (g/t), with total gold production over the eight year open pit LOM clocking in at 859,000 ounces, a 1.5% increase in the previous projection.

The LOM operating cash cost will average US$669 an ounce, using contract mining, which is 2.5% lower than the previous forecast.

The initial capital cost estimate has also gone down, declining 2.9% to US$136mln, excluding contingency costs.

Total revenue has been set at US$1.2billion and pre-tax cash flow of US$353 million is expected using a flat gold price of US$1,400 an ounce.

The proven plus probable reserve figure of 8.5mln tonnes 3.4 g/t for 924,000 ounces of contained gold, an increase of 1.6% on the previous feasibility study.

The share price, down around 17% in the year to date, lost a further 3% today. However, Shore Capital believes the market is completely overlooking the gold junior’s huge potential. “We continue to view Aureus as one of the top picks in the West African junior gold company sector,” said analyst Yuen Low.

John Meyer, of mining house SP Angel, added: “Improving the project economics has helped with project NPVs and approvals from the credit committee for the approval for the debt facility. 

“Against the weaker price environment we expect this to be stress tested at lower gold prices with a US$1,250 an ounce being used as a base case. 

“With funding arrangements in place and works started, the project is now well underway.”

SCD Energy, a subsidiary of DRK, has subscribed for 30mln shares at 15p each in a deal that will raise £4.5mln for Vatukoula (VGM), and give SCD 19.2% of the Fiji-based gold miner.

SCD will also be able to appoint its own director as chief operating officer once a suitable candidate has been identified.

The new strategic investor is not connected to Zhongrun, a Chinese mining group that already owns 29.9% of VGM and that also recently bought shares at 15p.

Under the agreement, DRK has agreed to work in conjunction with Vatukoula on the debt financing to fund the planned expansion programme of the gold mine.

If VGM enters into a US$40mln debt financing package facilitated or introduced by DRK within the next 120 days, the Chinese group will have the option to acquire another 24mln shares at 15p.

If exercised, DRK would then hold approximately 29.9% of the enlarged issued share capital.

DRK can nominate two directors, one of which, if suitably qualified, eventually will be appointed chief operating officer, Vatukoula said.

The funds raised from the subscription will be used for working capital purposes while VGM works to secure the debt financing.

The first £2.25mln tranche of the subscription is expected on 28 May and the remainder by 17 June.

DRK is a comprehensive oilfield service group engaged in engineering construction, technology service, chemical engineering and oilfield development.

VGM said DRK came to see the mine in January. DRK's presnece on the share register, along with that of Zhongrun, will give it access to Chinese capital for the US$40mln needed to proceed with the planned mine development at Vatukoula.

This development will see it open up deeper higher grade areas at the mine.

Shares were up 96% at 12.25p in mid-afternoon trading, after hitting 14p earlier in the day.

The mine began producing last summer and gold sales of over 22,000 ounces have been made to date.

"The board remains very encouraged and excited in the longer term growth of the company. We recently announced a five year production plan for New Luika mine which is forecast to produce 430,000ozs of production at 6.3g/t. 

"The major New Luika ore bodies remain open at depth, with the potential to become an underground mine which, combined with the ongoing revised feasibility study for the Singida project as well as the consolidation of the Lupa Goldfields, gives the company significant opportunity to deliver longer term value for shareholders," he said.

Last month, Shanta opted for a number of forward sale contracts in response to the current gold price environment. 

This will see 30,000 ounces of gold delivered up to December. The sales equate to 43% of the forecast annual production and were secured at an average price of US$1,429 per ounce of gold.

"We continue to make constructive progress in relation to restructuring our near term debt and expect to provide further updates shortly," Imrie told shareholders on Monday.

The bill contains a number of “encouraging concessions” including proposed ceilings on mining royalties and promotes for capital payback prior to the application of windfall taxes, said the company.

SolGold’s flagship projects, at Cascabel and La Encrucijada, are located in Ecuador.

It said it expects the new bill to pass into law quickly and will expedite drilling programmes on both projects starting with a 2,500 m programme at the high grade Alpala Project at Cascabel.

The drill contractor selection process has completed while six drill hole locations have been finalised to test outcropping porphyry occurrence at Alpala over 1km to a depth of 600m.

The new Mining Act sets a framework for the development of Kinross Gold’s US $1.3 bn 14moz Fruta del Norte Project, Southern Ecuador and the Ecuacorriente $1.4 bn El Mirador copper project. 

SolGold can acquire an 85% interest in Cascabel and the La Encrucijada projects.

The company added that new chief executive Alan Martin had started his role and has travelled to the projects this week to review permitting, drill sites and contractor finalisation.

SolGold shares, which more than doubled on Friday, eased a touch today to 3.81p.

SCD Energy, a subsidiary of DRK Energy, has subscribed for 30mln shares at 15p, which will raise £4.5mln for Vatkoula, and give SCD 19.2% of the Fiji-based gold miner.

SCD will also be able to appoint its own director as chief operating officer once a suitable candidate has been identified.

Under the agreement, DRK has agreed to work in conjunction with Vatukoula (VGM) to source the required debt financing to fund the planned expansion programme of the gold mine.

If VGM enters into a US$40 mln debt financing package facilitated or introduced by DRK within the next 120 days, DRK will have the option to acquire another 24mln shares at 15p.

If exercised, DRK would then hold approximately 29.9% of the enlarged issued share capital.

DRK will be able to nominate two directors, one of which, if suitably qualified, will eventually be appointed chief operating officer, Vatukoula said.

The funds raised from the subscription agreement will be used for working capital purposes while VGM works to secure the debt financing.

DRK is a comprehensive oilfield service group engaged in engineering construction, technology services, chemical engineering and oilfield development.

The project is located 65 kilometres north of Kalgoorlie in the Eastern Goldfields of Western Australia.

In mid-May, the company reported it was is in discussions and negotiations to secure funding for the project with interest from major mining and investment companies, from mainland China, Hong Kong and Singapore.

The preferred funding option was to bring in a Joint Venture partner or major equity investor to raise all the funds necessary to get the Aphrodite Gold Project into production by 2015.

It was noted the recent fall in the gold price has escalated interest from Asian markets, possibly as a result of a perceived better entry price for funding.

Aphrodite had appointed Target Engineering Solutions' Joel Chong to assist in negotiating agreements and act as a link negotiator.

TES has history in the China/Australia mining industry, trade and services.


Share Purchase Plan - extended to 20 June 2013

A Share Purchase Plan has been announced to shareholders at $0.04 per share, with individual shareholders registered at 23 April 2013 entitled to take up to a maximum value of $15,000 (375,000 shares) by the close date of 21 May 2013.

The company said in a statement that in light of the recent advancement of negotiations over the Aphrodite Gold Project, it was decided to extend the Offer so that shareholders will have access to updated information in making the decision whether to invest.

By then Aphrodite said it will be in a position to announce updated details of negotiations with potential Joint Venture partners, and also at that time further technical information on the Aphrodite Project should also have been received for announcement.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

In a sign of confidence in the company, Otis Gold Corporation's (CVE: OOO) chief executive officer has loaded up on shares this week.

President and CEO Craig Lindsay has added 50,000 shares to his position in Otis Gold at a price of $0.075, a seven per cent premium on Thursday's close. 

The Vancouver-based company, which operates exploration projects in Idaho, says it is poised to withstand challenges sweeping across the junior mining landscape. 

"We are chasing lots of different opportunities right now from financings to developing relationships with producing mining companies, to joint ventures. It's a busy time for Otis," said Lindsay in an interview with Proactive Investors in March. 

Part of those discussions centre around raising capital for its flagship Kilgore Gold project.

This month, Otis Gold filed its intention to build approximately 1,550 meters of roads into the North Target Area, which is next to Kilgore Gold. 

Otis Gold also announced a partnership that allows Lateral Gold to earn up to a 100 per cent interest in the Oakley Gold Project. 

The stock was unchanged as of 2:52 pm ET this afternoon. 

Amid declining gold prices, several miners are struggling to keep costs down, but Sacre-Coeur Minerals(CVE:SCM) (OTC:SCRMF) is not one of them. The company boasts all-in cash production costs of less than $500 an ounce at its alluvial/elluvial operations in Guyana. 

President and CEO Gregory Sparks attributes the reason behind the company's low-cost success mainly to the planned retrofitting of its first production unit, and the addition of a second unit, equipped with a fine gold recovery circuit. 

The second unit is expected to be operational in late June or early July this year at the latest. 

The net effect from these changes led the miner to boost its production forecast for the year, to between 6,000 to 8,000 ounces of gold, up from its prior estimate in the range of 5,000 to 7,000 ounces. 

"These efforts will have a significant effect on our cash operating costs as well," says Sparks. "We are constantly engaged in trying to refine procedures to cut costs."

Indeed, in the mid-case, average annual cash operating costs for the year are projected at US$364 an ounce, with a "risk opportunity range" of between US$318 to US$424 an ounce. Including royalty and taxes, the mid-case all-in cash production costs are expected at US$497 an ounce, based on a gold price of US$1,500 an ounce. 

Sacre-Coeur's focus on keeping costs low comes at a time when gold miners everywhere are reviewing operations after a recent steep fall in the gold price, with companies looking to ensure they maintain an operating margin. According  to the Thomson Reuters GFMS Gold Survey 2012, the average cash cost across the gold mining industry for mining an ounce of gold is a record $727 per ounce, putting Sacre-Coeur in a comfortable range. 

The average cash margin for the industry dropped to $872 an ounce in the second quarter from as much as $1,032 an ounce in the previous year’s third quarter.

Sacre-Coeur forecasts its mid-case cash margin for the year will be US$1,003 an ounce of gold, using a $1,500 an ounce gold price. 

The Canadian junior company, which is looking to build out its cash position over the next year from net cash flow as a means to initiate the distribution of dividends by 2015, also has a half million ounce surface mineable gold resource at its Million Mountain Zone 1 property in Guyana, with another eight targets situated along the 20-km structural trend. 

The company's foothold in Guyana spans 860 square kilometres of both producing and development-stage properties. The Zone 1 property hosts an NI 43-101 compliant hard-rock resource of 12.1 million tonnes grading 1.0 g/t gold measured, and 2.18 million tonnes grading 0.9 g/t gold indicated for a total 451,000 troy gold ounces combined.  

Because the results from its internal evaluation of Million Mountain Zone 1 were “very robust”, Sparks explains that the company skipped a formal  third party preliminary economic assessment and jumped straight into commissioning a bankable feasibility study – which it is aiming to have finished by August or September this year. 

The chief says the third party feasibility work is ongoing. "It may be possible to substitute the cyanide leaching back end of the plant with a multi-stage intensive gravity recovery system, which would lead to a significant reduction in capital and operating costs, and would improve economics substantially," Sparks says, adding that this is subject to ongoing testing, which has delayed the release of the report by about six weeks. 

"The opportunity we're investigating would have a profound effect on operating costs."

Based on an internal analysis, using a base case gold price of $1,500 an ounce, Sacre-Coeur is looking at a net present value of $145.5 million from the project at a discount rate of 5 per cent, and an IRR of 123%. 

"The economics are quite robust all the way down to $1,000 an ounce of gold," says Sparks. 

Following the feasibility study, a final development decision is expected, as well as the completion of development financing and the start of construction. Commissioning of the mine and plant for production is targeted for the third quarter of this year. 

The company has also budgeted 10,000 metres of core drilling this year aimed at expanding the Million Mountain Zone 1 resource, and to begin to develop a resource on its Million Mountain Zone 9 deposit - a "high grade, surface mineable body that fits our business model".

And it has the cash to do this. The company recently completed a $6.15 million financing through the issuance of gold-denominated bonds, with another similar offering this year possible dependant on gold prices, and/or "a streaming financing". 

Shares of Sacre-Coeur, which has a market cap of more than $9 million, have risen more than 52 per cent in the last 12 months. 

Only three of London’s listed gold miners would stack up as worthwhile investments if the gold price fell to US$1,250, broker Liberum suggested today.

At that level, Fresnillo (LON:FRES), Randgold Resources (LON:RRS) and junior Archipelago Resources (LON:AR.) would still be classified as investment grade, the broker suggested.

Liberum came to its conclusion after “stress testing” the precious metals sector at a number of different gold prices. Its research followed the recent rout in the gold price, which it said had underlined the sector’s vulnerabilities. 

The broker is optimistic over the medium term but said sentiment has been severely damaged and it cannot see bounce in the price without a major macro event.

"Over 30 years of above ground inventory, means there is no pricing support from the industry’s cost structure," it added.

The broker concludes that Fresnillo, Archipleago and also Russian miner Polymetal (LON:POLY) are best placed to weather another gold-silver price rout given their stand-out free cash generation and robust balance sheets 

At current spot gold prices (US$1,425) and current capex plans Hochschild (LON:HOC), PetroPavlovsk (LON:POG), Avocet Mining (LON:AVM) and African Barrick Gold (LON:ABG) are losing cash and prbbaly warrant either a financing solution, a comprehensive cut in discretionary spend and/or a major mine plan re-sequencing 

Randgold Resources (LON;RRS) and Shanta Gold (LON:SHG) are most at risk of needing additional project financing if gold drops to US$1,250/oz for a sustained period.

At a US$1,250/oz price, Liberum turns a seller of the whole sector, with the possible exceptions of Archipelago, Centamin (LON;CEY) and Polymetal (POLY).

On a more positive note, at US$1,650 per oz, the sector outlook is very healthy reckons Liberum with Petropavlosk (POG) and Shanta Gold (SHG) standing out as good value. 

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Sunridge Gold Corp. (CVE:SGC)(OTCQX:SGCNF) has done exactly what it set out to do last year in releasing a feasibility study for its Asmara project in Eritrea that minimizes the capital exposure in a challenging time for Canadian juniors, with the company now having a plan to start initial production almost one year earlier than the preliminary report. 

The Canadian junior company told investors Thursday that the latest study, which shows the mining of all four advanced deposits that make up the project and the processing of the ore near the large Emba Derho deposit, shows "much greater value" than the prefeasibility study released last year. 

Indeed, as a result of the earlier than expected production and cash flow, combined with capital cost reductions, initial capex requirements to be financed have been lowered by over $130 million. Capex has been cut to $354 million from $489 million, CEO Michael Hopley said on a conference call this morning. 

When the mining license is granted for the project, the Government of Eritrea will have a 10 per cent carried interest, and ENAMCO, the Eritrean National Mining Corporation, will be purchasing an additional 30 per cent of the project, thereby responsible for one third of all capital and operating costs at the mine going forward. 

"We've eased concerns about junior companies with large capital cost projects with a three phase start-up plan, which both increases the value and minimizes the capital exposure, with the results exceeding our expectations."

Hopley said on the call that Sunridge produced the feasibility study, with the goals outlined last year, both on time and on budget. 

The NI 43-101 compliant report outlines a net present value of US$837 million, at a 10 per cent discount rate pre-tax, or US$443 million after tax. This compares with a pre-tax net present value of $555 million in the prefeasibility study released last May. 

The internal rate of return (IRR) for the project was pegged at 34 per cent pre tax, or 27 per cent after tax, with a payback period of 4.6 years post tax. 

The study, which outlines a three-phase staged mining plan, was based on base case metal prices of $3.25 per pound of copper - slightly lower than the price used in the preliminary report - $1.00 per pound of zinc, $1,400 per ounce of gold and $25.00 per ounce of silver. Using current metal prices, the post-tax IRR for Asmara was still seen at 26 per cent.

In a research note by London-based Ocean Equities today, the brokerage firm said the results of the bankable study were positive. "The post-tax IRR of 26% using today’s commodity prices which have softened considerably is a great result for Sunridge."

The mine, which has a mine life of more than 15 years, is pegged to produce a total of more than 841 million pounds of copper and 1.87 billion pounds of zinc, as well as gold and silver. 

"In a little over two years, the Asmara Mine can start production and become a very important producer of copper, zinc, gold and silver for the benefit of Sunridge shareholders and the Eritrean people," said Hopley in the statement released Thursday with the figures. 

The construction period for the project - which is made up of the Emba Derho, Debarwa and Adi Nefas copper-zinc-gold and silver deposits and the Gupo gold deposit - is projected at one year. On site operating costs are seen at $29.42 per tonne through the life of the mine. 

The company said that the Emba Derho, Debarwa and Gupo deposits will be mined by open pit methods, while Adi Nefas will be mined underground. 

In the first phase of the three-stage mine plan, the high grade copper, or direct shipping ore, will be mined, and then transported 120 km to the port facility at Massawa for shipping to a smelter. Near surface gold and silver ore will also be mined from the Debarwa, Emba Derho and Gupo deposits and trucked to the same crushing facility near Emba Derho.

Full production will not be reached until the third phase, when primary copper and zinc ores from Debarwa, Adi Nefas and Emba Derho will be processed at a flotation plant at a rate of 4 million tonnes per year. Initial output is estimated for mid-2015. 

All four deposits included in the study, which was done by SENET, are located within a 30 minute drive on paved roads from the capital city of Asmara, nearby power, water and an international airport. The Red Sea port city of Massawa is also just 120 km east of Asmara. 

Sunridge said Thursday it will continue to work towards bringing the project into production as soon as possible by wrapping up the required environmental work, as well as applying for the mining license, after which it will be in a position to arrange for debt financing. 

Opportunities to further bolster the economics will also be looked into during detailed engineering, including the possibility to improve process rates with existing equipment. 

"With the results of the bankable feasibility study now in the public domain we would expect Sunridge to be exposed to a lot more interest from potential investors/off-takers as the company moves forward over the next twelve months," said Ocean Equities in its research report. 

At that level, Fresnillo (LON:FRES), Randgold Resources (LON:RRS) and junior Archipelago Resources (LON:AR.) would still be classified as investment grade, the broker suggested.

Liberum came to its conclusion after “stress testing” the precious metals sector at a number of different gold prices. Its research followed the recent rout in the gold price, which it said had underlined the sector’s vulnerabilities. 

The broker is optimistic over the medium term but said sentiment has been severely damaged and it cannot see bounce in the price without a major macro event.

"Over 30 years of above ground inventory, means there is no pricing support from the industry’s cost structure," it added.

The broker concludes that Fresnillo, Archipleago and also Russian miner Polymetal (LON:POLY) are best placed to weather another gold-silver price rout given their stand-out free cash generation and robust balance sheets 

At current spot gold prices (US$1,425) and current capex plans Hochschild (LON:HOC), PetroPavlovsk (LON:POG), Avocet Mining (LON:AVM) and African Barrick Gold (LON:ABG) are losing cash and prbbaly warrant either a financing solution, a comprehensive cut in discretionary spend and/or a major mine plan re-sequencing 

Randgold Resources (LON;RRS) and Shanta Gold (LON:SHG) are most at risk of needing additional project financing if gold drops to US$1,250/oz for a sustained period.

At a US$1,250/oz price, Liberum turns a seller of the whole sector, with the possible exceptions of Archipelago, Centamin (LON;CEY) and Polymetal (POLY).

On a more positive note, at US$1,650 per oz, the sector outlook is very healthy reckons Liberum with Petropavlosk (POG) and Shanta Gold (SHG) standing out as good value. 

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.

Jennings Capital analyst Dan Hrushewsky has highlighted what he called Asanko Gold's (TSE:AKG) "good project economics" at the Esaase gold project in Ghana, saying the company ranks first of all Canadian gold companies on its radar in terms of cash as a percentage of market cap. 

Indeed, based on Jennings' screen of TSX/TSX-V mining companies with a market cap of greater than $100 million, Asanko's cash as a percentage of market cap comes in at about 70 per cent. 

Cash equals 68 per cent of the upfront capex outlined in the company's pre-feasibility study, which the analyst says substantially lowers financing risk.

On Tuesday, Asanko announced the updated pre-feasibility economics of the Esaase project, showing an IRR of 23 per cent after tax, based on an upfront capex estimate of $286.4 million and total projected cash operating costs of $736 an ounce. 

The economics, says Hrushewsky, are reflective of a flotation circuit, which decreased the size of the carbon-in-leach (CIL) circuit that now needs to process less than 10 per cent of the millhead mass. The circuit also lowered operating costs due to the lower amount of reagents and energy required to process the lower mass throughput, and cut the disposal costs of the flotation tails that are devoid of sulphides. 

Average annual free cash flow, for the estimated mine life of 10 years, is projected at $87 million at a price of $1,400 an ounce, with the company saying the life of the mine has the potential to increase even further, while average annual cash flow is still pegged at $65 million using a $1,200 an ounce gold price. 

The study is based on the October 2012 mineral resource estimate of 4.41 million ounces of gold in the measured and indicated category, and resulted in 2.37 million ounces of resources being converted to proven and probable reserves. 

The Jennings analyst noted that the lower cut-off grade of 0.6 grams per tonne (g/t) versus 0.8 g/t used for the measured and indicated resource base, on which the new proven and probable reserve estimate is based, should have resulted in a reserve estimate with more tonnes and a lower grade. 

"However, the amount of tonnes converted to reserves was much lower than we expected.  This, together with the lower grade, resulted in a significant negative impact to our valuation," noted the analyst in his report, which took the company's price target down to C$4.75 from C$5.75 previously. 

Still, Asanko noted in its release Tuesday that the detailed mine design as part of the definitive feasibility study now underway could result in more resources converted to reserves. The definitive study is expected in the fourth quarter of this year, with hopes of attaining the mining leases and a final environmental permit by year-end. 

Aside from the low financing risk, Hrushewsky, which reiterated his speculative buy rating, took note of several other "good reasons" to own Asanko, including a large deposit at Esaase with good open pittable grades and continuity, as well as a newly acquired contiguous concession that contains a shear zone similar to the one that hosts the current resource. 

He also adds that Ghana is a good jurisdiction in which to operate, with a company that has a "proven management" team. 

Indeed, chief executive of Asanko, Peter Breese, joined the company in October last year, and brought a team of "highly seasoned" executives that he says focused on capital efficiency at Esaase, as well as on lowering operating costs and “fine-tuning” the metallurgical flow sheet from the pre-feasibility study the company announced in September 2011, when it functioned as Keegan Resources. 

Breese has more than 25 years of operational mining experience in Africa and Australia, having been the CEO ofMantra Resources prior to its $1 billion acquisition by ARMZ. 

Orvana Minerals Corp. (TSE:ORV) was holding steady Tuesday after announcing fiscal second quarter results that reflected strong copper and gold production at its Spanish mine, which was offset somewhat by higher total costs. 

For the three months to March 31, the company swung to a net profit of US$6.5 million, or 5 cents per share, compared to a loss of US$8.0 million, or a loss of 6 cents per share, in the year-earlier period. 

Excluding an unrealized gain from the revaluation of the company's financial instruments, profit was US$0.9 million, versus an adjusted profit of US$2.8 million a year ago. 

Operating cash flows, a key metric in the industry, rose to $14.0 million from a loss of $5.6 million in the same quarter a year ago. Before changes in non-cash working capital, cash flows came in at $10.6 million.  

Revenue surged 42 per cent to $44.3 million from $31.2 million a year earlier. 

Production in the quarter totalled 18,144 ounces of gold, 3.9 million pounds of copper and 191,374 ounces of silver. Output of all three metals was up significantly from the figures a year ago, consisting of 12,755 ounces of gold, 3.0 million pounds of copper and 115,282 ounces of silver. 

"The second quarter of 2013 highlights our focus on stabilizing and optimizing operations, says interim president and CEO, Michael Winship, of the company, which operates the EVBC mine in Spain, the UMZ mine in Bolivia and is developing the Copperwood project in Michigan.

"We had record production numbers at our EVBC Mine and we will continue to implement changes to further improve our performance."

Indeed, production of all gold, copper and silver increased across the board at EVBC as it realized the benefit from a new hoisting and shaft system, but total cash costs also rose to $784 per ounce of gold sold, from $765 an ounce a year earlier. Total production costs climbed to $1,076 an ounce, from $1,033 an ounce.

Mining costs also jumped to $17.0 million from $8.3 million.

"We continue to pay down our debt, strengthening our balance sheet. With the volatility in the metals markets, we are also concentrating on driving down unit costs," said Winship in the release Tuesday, with the company adding that reviews have been started to reduce both operating and capital costs. 

Debt net of cash, cash equivalents and restricted cash for debt repayment was $50.9 million, while payment of long-term principal and interest was $8.8 million in the six months that ended March 31.

The company also spent $8.8 million in capital expenditures in the latest quarter, with $1.2 million of that going toward the development of its Cooperwood project in Michigan, US, where it recieved the last major permit necessary for the mine in February this year. 

Optimization work is now being done to the feasibility study, with a focus on additional metallurgical testing and mine design. It said Tuesday it is also looking at a number of options to enhance the value of the project for its shareholders, including mine financing, partnerships and a third party acquisition. 

Its long-term goal is to improve operations at its two main mines to boost operating cash flows in its effort to pay down debt.   

For its fiscal 2013 year, the company is looking to produce 75,000 ounces of gold, 18 million pounds of copper and 850,000 ounces of silver. 

Bullabulling Gold (LON:BGL, ASX:BAB) says it can shave 20% off the cost estimates it presented in its pre-feasibility study for the proposed Bullabulling mine, in Western Australia.

The company has told investors that pit optimisations, as part of the definitive study, indicate cash costs of $850 to $950 – in the $1,350 gold price scenario. 

It also showed sound margins under all the evaluated gold price scenarios (which went down as far as US$1,200) as well as demonstrating substantial production and mine life, Bullabulling said.

The company expects cash costs in the early years of the project will be substantially lower than the life of mine average. That is because Bullabulling will initially target the higher grade areas.

And yesterday this plan was boosted further with a new resource estimate for the Edwards/Gryphon area, the envisaged starter pit, which added an extra 200,000 ounces of contained gold.

The upgrade followed a successful drill programme which confirmed extensions to the two areas, and that they could in fact be developed as one single starter pit.

Bullabulling said some of the cost savings also come from the assumption that it would use ‘owner mining’ - rather than by contractors as envisaged in the PFS – and from savings of haulage costs related to moving waste material to alternative on-site dumps. 

The company now plans to prepare detailed pit design using the Whittle pit shells created through this latest optimisation work.

After that, Bullabulling says it will carry out production scheduling and financial modelling work, and by a ‘mid-year’ re-optimised economic assessment.

The recent de-rating of the Medusa Mining (LON:MML) stock offers a compelling entry point for investors, reckons broker SP Angel.

This has happened against the backdrop of a falling gold price, notes senior analyst Carole Ferguson.

Medusa is un-hedged gold producer which is building up significant production in the Philippines through expansion at the existing Co-O mine, but such activities have in the short term resulted in cutbacks in production, which has disappointed the market, she notes.

However, full year 2013 is a transitional year for the miner, while 2014 brings a step change in production to 200,000 ounces a year.

In recent quarterly results to March 31, the firm said its Co-O mine produced 14,021 ounces of gold at a recovered grade of 6.76 grams per tonne (g/t) at a cash cost of US$296 an ounce. 

This was down from 18,177 ounces produced in the preceding quarter at 8.16 g/t, and a cash cost of US$279 an ounce.

The broker rates the shares a buy and has a target price of 450p - compared to a current price of 181 pence.

-- Adds broker comment--

Minera IRL (LON:MIRL, TSE: IRL) will focus on permitting for its Ollachea mine in Peru over the remainder of the year after completing its latest exploration programme under budget and ahead of schedule.  

Minera drilled down to 1,234 metres at Ollachea, with the production size tunnel to be used in future to transport ore from the future mine to the plant site.

Mining of the tunnel was "highly successful" with ground conditions proving better than expected in the slate rock type which hosts the orebody, Minera said today.

The miner added it remains on track for Environmental Impact Assessment (EIA) approval in the second half of 2013, while archaeological clearance of the plant site was nearing completion at quarter end.

In Argentina, Minera added that negotiations are also well advanced to finance the development of Don Nicolas from Argentina-based sources of capital.  

Don Nicolas is fully permitted and available for immediate development once project financing is in place.

Minera intends to develop Ollachea and Don Nicolas eventually to replace the declining Corihuarmi gold mine in Peru.

Production was down at Corihuarmi in the three months to March, as anticipated, due to lower grade ore. First quarter results saw revenue drop 17% to US$9.2mln, which was based on gold sales of 5,660 ounces, a fall of 13%. The company posted an average realised gold price of US$1,631/ounce, down 4% on the previous year. 

Pre-tax profits came in at US$0.2mln, down 94%, with the company holding $6.5mln in cash at the end of March.

Courtney Chamberlain, Minera’s executive chairman, said that like many gold companies its shares had been hit by the market uncertainty and the recent volatility in the gold price, though he believes that the fundamentals remain favourable for a strong gold price going forward. 

“Factors working in favour of a higher gold price include the continuing weakness in world economies and currencies, reducing mine production and higher operating costs, retail buying support in the Far East, particularly China and India, and continued Central Bank buying.

“In my view, the current gold price is a good gold price particularly in light of the projected low cost of production projected for both Ollachea and Don Nicolas.  

"At both projects, the project economics demonstrated in the respective feasibility studies are robust using a base case gold price well below that currently prevailing.“

Broker Canaccord said the results were broadly in line with forecasts, adding that the company continues to trade at a hefty discount to other junior gold miners.

Minera, which is producing, currently trades at a ratio of $24/oz (EV/resources), against junior producers on $46/oz and the earlier stage developer and explorer average of $30/oz.

The broker has a target price of 50p/share.

Sanlam adds that Minera has US$6.5m in the bank after the placing in February but will need to come back to the market when it funds Ollachea’s construction. 

This may weigh on the share price, the broker says, though it rates Ollachea as a very attractive project with substantial mine life extension potential.