CGA Mining net profit soars 307% on high gold price and production boost

CGA Mining (ASX: CGA, TSX: CGX) has delivered a bumper set of numbers in the company's annual report for financial year 2011.

The stand out metric is a 307% increase in net profit to $65.1 million, which was generated from a 51% boost in gold and silver sales to $235.3 million.

The gross profit jumped 70% to $80.4 million.

Where the CGA Mining story becomes even more interesting, is that the company now has a war chest of $204.6 million in cash and liquid assets - almost double from a year before.

Throughput boost

Helping to deliver the production numbers was a 37% increase in throughput with a total of 6,152,561 dry tonnes milled.

The best bit for the company though is throughput is set to ramp up with the 6.5Mtpa plant upgrade to be finalised with commissioning of the supplementary crusher expected to occur within the next two weeks.

This potential production increase could be just the tip of the iceberg, with CGA Mining already kicking off work on the comprehensive Scoping Study to lift production rates to plus 10Mtpa - which the company said is well advanced and continues to track on schedule.

Masbate - by the numbers

CGA Mining successfully poured the first gold in May 2009 to kick off production from Masbate.
The project has a total Indicated Resource of 4.55 million ounces (153.41 million tonnes at 0.92g/t), a total Inferred Resource of 3.22 million ounces (127.15 million tonnes at 0.79g/t), and a Probable Reserve of 3.03 million ounces (92.2 million tonnes at 1.0g/t) of gold.

Masbate poured 150,000 gold ounces in the first year of operation, and is on track to produce at a rate of around 200,000 ounces annually.

2012 exploration plan

The anticipated upside for Masbate are these profit results have the potential to be the start of a string of top results, with the company allocating a US$20 million exploration budget for financial year 2012.

CGA Mining has planned to undertake an extensive 144,000 metres of reverse circulation drilling, and 28,000 metres of diamond drilling, principally focused on converting Inferred resources to Reserves.
The company also aims to identify new Reserves and Resources from both extensions to existing pits and a number of new targets.

If CGA Mining continues to find exploration success as production is ramped up and the gold price remains high - then the company is very well positioned for future profitability.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19126/cga-mining-net-profit-soars-307-on-high-gold-price-and-production-boost-19126.html