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Gold One International on track for gold production of 120,000 ounces

By achieving its fourth quarter gold production targets, Gold One is continuing to ramp up production levels at Modder East and is now on track to reach its target of 120 000 ounces for 2011. On most valuation parameters, Gold One is undervalued relative to its peers.
Gold One International on track for gold production of 120,000 ounces


In line with previous production guidance of 21 480 ounces for the December 2010 quarter (+10%), Gold One International (ASX, JSE: GDO), has indicated it is on track for production of 25,000 ounces for the March 2011 quarter.

The Modder East mine near Johannesburg in South Africa recovered a grade of 6.49 grams per tonne. Metallurgical recoveries remained high at 96%, despite the higher throughput.

Total gold production for 2010 was 66 445 ounces.

On an Enterprise Value to Reserve Ounce and EV/Resource ounce, Gold One remains under the median ranking of gold producers and affords value to the long term gold investor.

The company has forecast increased production levels at Modder East 25 000 ounces for the 2011 March quarter and 120 000 ounces for 2011.

The production improvement comes as a result of an increasing number of mining panels that have transitioned from ledging to full stoping operations.

The quarterly report to be released toward the end of January will provide further operational and financial details, including cash costs for the December 2010 quarter.

On December 15 Gold One reported a very positive outcome from a resource and reserve upgrade at Modder East, with resources gaining 18% and reserves up 13%.

The gold upgrade extended the mine life of Modder East by five years out to 2022.

Modder East’s total life of mine is now 13 years, and with a plant capacity of 100,000 tonnes of ore per month, production between 2012 and 2015 is forecast to exceed 150,000 gold ounces annually.

Based on the current spot gold price around US$1400, the in situ value of production for the four years from 2012 to 2015 is US$840 million.

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