Vatukoula Gold Mines reports higher Q3 recoveries, sales, earnings and production at flagship project

Fiji focused Vatukoula Gold Mines (AIM: VGM) said that mine net earnings for the first three quarters amounted to £7.3 million compared to a loss of £1.2 million for the equivalent period of 2009 after gold recoveries and sales from its flagship Vatukoula gold project increased along with the average realised gold price.
Gold recovered increased from 12,869 oz (ounces) in Q2 to 13,306 oz in Q3 and from 26,313 oz to 38,402 oz in the nine months to 31 May, while sales for the first three quarters were up from 26,629 oz to 35,391 oz despite sliding from 15,267 oz to 11,299 oz in Q3. Sales were achieved at a higher price, which improved from US$1,104/oz on average in Q2 to US$1,161 oz in Q3.
Q3 sales and recoveries were helped by higher rates of underground production, which rose from 62,606 tonnes to 71,534 tonnes. Q1 production amounted to 45,105, making for a total of 179,245  tonne of ore mined, marking a year on year improvement from 168,831 tonnes. The grade of underground ore mined for the nine months was 7.28 g/t (grammes per tonne) compared to US$6.75 g/t in the previous year.

The improvements in production in the first nine months was a result of the capital investment programme, which allowed for increases in plant and equipment availability in ore loading and transport capabilities.
The Vatukoula treatment plant (VTP) processed 312,003 tonnes of combined sulphide and oxide ores at an average grade of 4.59 g/t during the nine month period compared to 143,033 tonnes processed during the equivalent period of the previous year.
Cash costs per ounce of gold recovered was US$679 for the nine months and US$751/oz for Q3 compared to US$927/oz for the first nine months of 2009 and US$684/oz in Q2. The Q3 increase was mostly due to lower grades mined.
Cash costs per tonne of ore mine reduced to US$81 for Q3 and US$84 for the nine months compared to US$86/t in Q2 and US$148 in the first three quarters of 2009. Vatukoula has stated that a sustainable increase in gold production will reduce our costs on a per ounce basis to below US$600/oz, assuming an oil price of below US$80/barrel.
The company said it was “very encouraged” by the increase in mine ore and gold recoveries, which supports its long term goal of ramping up production to 100,000 oz pa (per annum) from the mine, which it said it could achieve as soon as in 2011.
“...the anticipated increase in gold production has been constrained by a slower than planned increase in mine development. Management has addressed the mine development rates which are now improving.  Processing of the oxide ore is progressing very well and the Vatukoula Treatment Plant continues to operate satisfactorily,” said chief executive of Vatukoula Gold Mines David Paxton.
A new exploration programme has been initiated to explore the Vatukoula properties with the company stating that the mine and the surrounding areas have excellent potential or the discovery of additional high grade gold mineralisation. The initial study is anticipated to be completed in August 2010 following which VGM will initiate the field programmes.
Total investments for the year to August 2010 are expected to amount to US$10 million each on capital items and on mine properties and development.
Shares in the company rose 2.5% on the update.
The Vatukoula mine has a current JORC-compliant Resource of 4.3Moz gold. Broker WH Ireland has recently said that there is “exceptional” extensional and near-mine exploration prospectivity at Vatukoula.

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