Concentrate production at the Omagh mine during the three and six months ended June 30, 2013 was significantly below production levels of the corresponding periods of 2012 due primarily to the processing of lower grade ore.
The main production focus during the second quarter has been on the processing of ore from the low grade stockpile. Earlier in the year there had been some limited open pit mining on the Kerr vein which ceased later in the first quarter when the pit met its planned design limit. From the second half of 2012 mining from the Kearney pit had become totally restricted as a result of the surplus rock stockpile on the site reaching capacity levels. This surplus rock was due to be transported from the site in 2012 with the Omagh mine having completed construction of public road improvements, at its own cost, to comply with the conditions of the planning consent. However, following a judicial review brought by a private individual on the grounds of procedural failings by Planning Service, the planning consent was quashed with the surplus rock remaining on site. This ongoing limitation will result in future production continuing to be from the low grade stockpile. To generate cash from its operations going forward, the Company is continuing to improve efficiencies and cut costs during the second quarter.
During the three and six months ended June 30, 2013 the mill was fed with the lower grade ore and production continued to be hampered by both the ongoing variations in the metallurgy due to the inconsistent grade of ore being milled and the clay content of stocked material. Production was also hampered by some unplanned downtime in the plant.
The reinstatement of a third paste cell was completed during the first quarter. Work, which had commenced in early 2012, on the development of a number of paste cells already permitted, in preparation for their future utilisation when underground mining at the Omagh mine commences was also progressed earlier in 2013 following the cessation of mining on the Kerr vein.
The 2013 production figures and metal contents are provisional and subject to averaging or umpiring provisions under the concentrate off - take agreement detailed in a press release dated October 3, 2007.
The major focus of exploration activities in 2012 and the first half of 2013 has been the continuation of the successful drilling program. In total, 16,879 metres have been drilled since the program commenced in March 2011 with significant gold intersects being reported.
The drilling programme began in 2011 with the objective of extending the depth and extent of the Joshua vein and providing data for a potential underground operation based upon the Joshua and Kearney veins. During 2011 and 2012 ninety five holes were drilled totalling 16,347 metres. Channel sampling was also carried out, during this period, on the Joshua, Kearney and Kerr vein systems. On Joshua, a total strike length of 213 metres was sampled. On Kerr, an increase in average vein width and gold grade was identified within depth over a 30 metre strike length.
The exploration programme had expanded considerably in 2012 with six drills operational during the first half of the year. The second half of the year saw the number of rigs progressively reduce with one rig, owned by the Company, remaining in operation by the end of 2012. The two principal objectives of the drilling programme were to complete the deeper holes on Kearney in order to gain a more accurate picture of the zone of mineralization for the purpose of the underground mine plan and to extend the strike of Joshua to the north and the south, and begin to target deeper sections of the vein. Drilling continued in to the first quarter of 2013 when two further holes targeting north Kearney and central Joshua were completed and a further drill hole commenced in the second quarter. Following the scale back of drilling in 2013, more time was dedicated to logging remaining drill cores, the sealing off of all accessible drill holes, updating databases and progressing towards a resource estimate using the Micromine geological modelling computer program.
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