Lachlan Star broad gold hits continue from CMD mine in Chile

Lachlan Star (ASX: LSA) continues to deliver a positive news flow from the gold producing CMD Gold mine in Chile - with the latest a string of broad gold hits outside of the resource model.

The impact from this is the company now expects a resource upgrade in the December quarter, along with some of the Inferred resources boosted to the higher confidence categories of Measured and Indicated.

The best bit is that the mine is about to become a whole lot more profitable.

Mick McMullen, managing director, told Proactive Investors today, that the economics of the CMD are mainly impacted by production rates given the plant is running at low throughput rates due to lack of ore.

"The plan for the mine is to take it from the 1.5Mtpa it was at in December 2010, to 2.7Mtpa annualised this quarter, then around 3.5mtpa annualised next quarter.

"This will see cash costs fall from around US$1100/oz when we bought it to mid US$700's by the end of the year."

The latest gold hits at CMD

Lachlan Star is currently drilling at the Toro and Tres Perlas Deposits.

The latest highlights from Toro include, 16 metres at 1.30 grams per tonne (g/t) gold from 111 metres, and 7 metres at 1.76g/t gold from 55 metres.

There were also some very broad hits including 29 metres at 0.73 g/t gold from 40 metres.

Adding some spice to the overall economics at CMD, Tres Perlas has delivered some copper hits including 12 metres at 0.47% copper from 47 metres, and 20 metres at 0.42g/t gold from 47 metres.

Well-funded

Lachlan Star is also very well-funded, after earlier in the month entering into an agreement with Dundee Securities regarding the private placement of 16 million special warrants at A$0.82 to raise A$13.12 million.

Dundee is acting on the behalf of a syndicate of investment dealers including Salman Partners Inc.
Each warrant can be exercised into one share, with a second component a one-half purchase warrant for an additional share at A$1.20.

June quarter gold sales of US$15.3 million

In the June 2011 quarter the company delivered a 20% boost in gold production to 10,134 ounces with an average sale price of US$1510 per ounce - providing gross revenues of US$15.3 million.

The month of June produced 4250 ounces - the most for a month since acquisition.

The C1 cash cost was US$841 per ounce.

A major plus to the June quarter production was 55% of the ore was sourced from outside of the JORC Resource.

The company said there is another plus 682 ounces of gold in inventory, with 10,559 ounces of gold stacked onto the leach pad.

The company has an unhedged production of around 45,000 gold ounces annually.

CMD is an open pit heap leach gold mine that commenced production in 1995 and has historically produced around 830,000 gold ounces.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/18881/lachlan-star-broad-gold-hits-continue-from-cmd-mine-in-chile-18881.html