Quarterly Activities Report
SUMMARY
On 21 April 2011 as previously reported to ASX, Directors of the Company resolved to place the Company into voluntary administration. The Company appointed Stephen Longley, David McEvoy and Simon Theobald of PPB Advisory as voluntary administrators. The objective of the voluntary administration is to allow the company to pursue its planned capital raising under the moratorium provided by the voluntary administration regime, whilst also running a parallel trade sale as a secondary option.
The administrators have placed the company’s operations on care and maintenance in order to preserve cash flows while they work with the company’s existing advisors, Macquarie Capital Advisers Ltd, on the capital raising and trade sales options.
Production for the quarter of 5,242 ounces was well down on Q1 guidance of 7,000 to 10,000 ounces. Production for the quarter was predominately from the open pits at Sarah and Ramornie North, which contributed 80% of gold production. Underground production continued to increase month on month over the quarter and in March the Craic mine delivered 25% of the month’s production and 11% of the overall quarter’s production. Open Pit production ceased in April with future mining focused on the Craic and Transvaal underground mines.
Underground ore grades at 5.9 g/t for March are well up on average open pit grades experienced across the first quarter at 2.7 g/t. Improving March underground mining rates and ore delivery are encouraging and set the scene for future underground production expectation from both Craic and Transvaal mines.
Decline advance and general development meters achieved were substantial through the quarter with improvement each month. The ongoing rehabilitation and dewatering at the Transvaal underground mine continued at a satisfactory rate. This development work is resulting in increased access to stope ore.
During the quarter a A$4.5 million pre-paid gold facility was finalised through Macquarie Bank Ltd, which included providing Macquarie Bank Ltd with royalty in respect of gold produced from 1 February 2011, and a Standstill Agreement was reached with the major creditors for A$ 11.1 million.
The Q1 production under-performance, closing out and demobilising from the costly open pit mining areas coupled with high underground development expenditures necessitated payment terms being negotiated with major creditors and suspension from ASX Trading at the end of March.
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