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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG -- Ignore unavailable to you. Want to Upgrade?

To: Northern Marlin who wrote (1118)	12/6/2003 10:12:02 AM
From: Andrew	Read Replies (1) \| Respond to of 48092

From Oct 29th 3rd Q news release Higher grade ore from lower levels. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ LaRonde operating performance Despite record tonnage from the lower part of the mine in the third quarter, production drilling challenges slowed down planned extraction time. As a result, five mining blocks containing approximately 27,000 ounces were not extracted as planned in the third quarter which negatively affected operating results. The mill also realized lower-than-planned recoveries due to numerous stop-start cycles resulting from shortages of ore and electrical problems as well as variable ore types coming from the different levels of the mine. A number of initiatives have been undertaken to accelerate the drilling, blasting and extraction cycle. These include the addition of two production drills acquired with the Bousquet purchase, increasing drill hole diameter, the blasting of stopes in one mass blast rather than four separate blasts and using electronic detonators. The blasting results have been positive with good fragmentation, less vibration, minimal damage to the surrounding walls and higher productivity. The lower mine is currently entering a phase with a higher proportion of secondary stopes available to be mined. These secondary mining blocks are destressed and have historically been easier to extract. All of these factors are expected to result in increasing quantities of higher gold grade ore being extracted from the lower mine. In spite of these difficulties, over 361,000 tons, or 63 per cent, of the ore produced in the third quarter were hoisted from the lower levels of the mine. Total ore processed for the quarter was nearly 571,000 tons, or 6,200 tons per day on average, which was well below target of 7,800 tons per day resulting in increased on-site operating costs of $56 per ton. At target ore production levels, these costs are expected to be approximately $45 per ton. The proportion of ore from the lower levels of the mine is expected to continue to increase as ore development has been on plan this year and all the stopes slated for production in the fourth quarter have been fully developed. Including underground broken ore, over 283,000 tons were stockpiled at the end of the quarter, an increase of over 64,000 tons from the previous quarter. The ramp system between the two lower level mining horizons is now complete which facilitates the efficient movement of production equipment and man power throughout the lower mine. The mine's overall performance is expected to improve steadily with underground crushing infrastructure now optimized, the ability to hoist at design capacity in the Penna shaft and the mill's proven ability to mill at or above 8,000 tons per day. Also boding well for production is the fact that the rockfall experienced during the first quarter has been completely backfilled and normal mining operations in the immediate area resumed in the third quarter. Operating challenges over past year leads to reduction of gold production projections Gold production was 51,192 ounces in the third quarter, slightly higher than the third quarter of 2002 but well below expectations. Cash operating costs to produce an ounce of gold were $309 per ounce compared with $197 per ounce in the third quarter of 2002 due to fewer than planned higher grade gold mining blocks being extracted, resulting in lower-than-expected gold production and a significantly stronger Canadian dollar. Including the El Coco royalty, total cash operating costs were $368 per ounce compared with $208 per ounce last year. The ore from El Coco and the related royalty payments will be largely exhausted by the end of 2003. Given the third quarter results, the company will not achieve its most recent production target of 300,000 ounces for 2003. In the fourth quarter, production is expected to be between 70,000 and 75,000 ounces at a cash operating cost between $210 and $230 per ounce. Total cash operating costs, including the El Coco royalty, are projected to be between $240 and $260 per ounce. The cash operating cost projection has been prepared based on assumed byproduct prices and exchange rates for the fourth quarter of $4.90 per ounce silver, 40 cents per pound zinc, 85 cents per pound copper and $1.30 (U.S.)/$1 (Canadian) exchange rate. The company is undertaking a comprehensive review of short-term and long-term production targets with a more conservative view, based on recent experience, of daily tonnage targets at depth thereby placing more emphasis than originally planned on the upper levels of the mine. While this does not have an impact on gold reserves, the resultant change in the originally planned ore mix would more evenly distribute gold production over LaRonde I's life. The new mine plan will be devised with an annual gold production target of 300,000 ounces per year. Any displacement of gold/copper mining blocks at depth will result in a corresponding increase in production from silver/zinc mining blocks. The mine planning process is continuing and is expected to be completed in December.