Gold production for Q1-2013 was 10,034 ounces, which was 12% lower than Q4-2012 gold production due primarily to a 10% lower head grade coupled with a 4% drop in ore tonnes processed, offset in part by a 2% increase in the plant recovery. The drop in ore tonnes processed was due to plant throughput being negatively impacted by the commissioning of a new wetscreen in the grinding circuit which has now been rectified and by unscheduled maintenance made in the current quarter.
Open pit ore grades are expected to trend higher over the remainder of 2013 as higher grade blocks are expected to be mined and as grade control initiatives, including further refinements to patterns for drill and blast, take hold.
Underground ore grades are also expected to improve as we modify and improve the method of cable- bolting the underground stopes, the underground transition to owner-operated drift mining is made in Q3- 2013, and benefits of other on-going grade control initiatives are realized.
Cash cost per gold ounce sold for Q1-2013 was US$1,246 per ounce, which was 33%, or US$308 per ounce, higher than Q4-2012 cash cost per gold ounce sold of US$938, due mainly to higher per ounce cash cost from lower head grades, higher per tonne operating costs and a stronger SEK currency in the current quarter.
The higher per tonne open pit mining costs were unusual and reflected a higher-than-average strip ratio as part of mine sequencing, reduced ore tonnage from normal inefficiencies encountered on the changeover to the new open pit contractor in January, and higher costs associated with the transition to new drill and blast techniques and patterns. Open pit mining costs per tonne are expected to return to levels seen in previous quarters for the remainder of 2013.
Underground mining costs per ore tonne also increased in the current quarter due to the processing of a greater tonnage of higher-cost contractor cable-bolted stope ore and repair costs incurred for mechanical failures to the underground production drill and scooptram in February 2013, which also lowered the quantity of stope ore mined. Underground mining costs per ore tonne are expected to remain elevated until the changeover from contractor to owner-operated ore mining and the subsequent ramp-up are successfully completed.
As a cash conservation measure, the Lupin camp and operations were shut down in late April 2013 and will remain closed indefinitely. No mobilization of mining equipment to site was made and no underground mining activity was conducted prior to closure of the camp. Only essential work will continue during this period of shutdown to ensure all key permits are kept in good standing.
The Lupin camp and surface infrastructure are in excellent condition and will allow Lupin to re-open expeditiously should market conditions and the price of gold, among other factors, improve to allow the Company to re-commence work.
Conference Call Details
Elgin Mining will host a conference call and a presentation/audio webcast on Tuesday, May 14, 2013 at 9:00 am (Eastern Time).
Live Dial-In Information
Toronto and International: 416-340-2216
North America (Toll Free): 866-226-1792
Participant Audio Webcast: www.elginmining.com
Replay Call Information
Toronto and International: 905-694-9451 passcode 8807287
North America (Toll Free): 800-408-3053 passcode 8807287
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