During Q1 2013, 78,000m3 of gold bearing wash was processed at a recovered grade of 330mg/m3 for 830oz gold. That was 20% under budget and the major reason for cash generation underperformance.
Therefore, the Company's response to the losses incurred is to maximise efficiencies and reduce leased equipment costs by changing to a mining regime on a 24/7 basis on one site only. Grade control is also being reassessed in the light of the reduced gold price. The changeover is scheduled for late May.
"In spite of the severity of the adverse market conditions, management believes in the benefits of a consistent and focused strategy, supported by the full support and dedication of our team", said Simon Henderson, CEO of Glass Earth Gold.
In Q2, Glass Earth is expecting to report a cash loss from placer mining but that trend is expected to reverse with the above noted changes and placer mining is expected to generate positive cash flow in Q3 and Q4 while producing approximately 2,600 oz of gold.
Simon Henderson added: "The uncertainties around the price of gold remain a major concern. Our forecasts for the next quarter points towards modest profitability and positive cash generation, based on price of US$1,400/oz, which we believe is sustainable. Moreover, the Glass Earth gold team remains committed to delivering enhanced results on operational metrics, therefore supporting the validity of our business model at this stage. We believe that consistency and determination in the execution of our business model remains the Company's best asset and will enable us to ride through this challenging period."
About Glass Earth Gold
Glass Earth Gold is one of New Zealand's most active gold exploration companies with landholdings proximal to producing deposits and cash flow from its wholly owned placer projects. With an experienced geological team the Company is exploring promising gold prospects across both the North and South Islands.
In the North Island, exploration efforts are focused on large epithermal gold systems in the Hauraki Region, akin to the operating Martha Hill mine, (Newmont Mining).
In the Hauraki Region, Glass Earth Gold has identified and developed significant ground positions around the active Martha Hill gold mine operations at Waihi. The Newmont-Glass Earth Gold Waihi West JV (Newmont earning in) and Hauraki JV (65/35), including drilling at the WKP discovery, are being actively explored and managed by Newmont in collaboration with Glass Earth Gold.
The recent announcement that Glass Earth Gold has acquired option rights to the Neavesville gold/silver prospect (just north of WKP) will mean an increased exploration focus in the Hauraki region.
In the South Island, exploration efforts are focused on the Otago Region, home to OceanaGold's Macraes Goldfield, for identification of mesothermal "Macraes-style" gold targets and revenue generation through placer (alluvial) gold production.
Mr Simon Henderson, MSc Geology (CODES), an AusIMM Chartered Professional under the Discipline of Geology; is a Qualified Person as defined by National Instrument 43-101 and an employee of the Company, and has reviewed and approved the technical information given above.
For more information on Glass Earth Gold, please visit www.glassearthgold.com.
GLASS EARTH GOLD LIMITED ("GEGL")
For the three months ended March 31, 2013
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