China Gold International Resources Corp expects first gold output from a new crusher and ADR plant at the Chang Shan Hao (CSH) Gold Project in Inner Mongolia in the second quarter of 2014 and annual gold production is expected to reach about 260,000 ounces by 2015. The ramp-up of production and test runs on the new facility with daily capacity of 30,000 tonnes are in progress.
The company also plans to grow production capacity at its Jiama Copper-Polymetallic Project in Tibet Autonomous Region in two stages. At the completion of stage one, scheduled for the second half of 2014, the new mill’s daily capacity is expected to grow from 6000 tonnes to 28,000 tonnes of ore. Stage two construction of an additional 22,000 tonnes daily capacity is expected to be completed by the second half of 2015.
This expansion will grow Jiama’s daily processing capacity nearly eight times from 6000 tonnes in 2013 to 50,000 tonnes in 2015. By 2016, annual copper production is expected to reach 176,000,000 pounds.
In the company’s production and operating outlook for 2014, which formed part of the recently released year-end results, China Gold International said organic growth, cost management and international expansion continued to be its main goals for 2014. It says it will continue to leverage the technical and operating experience of its controlling shareholder, China National Gold Group Corporation (CNG), to improve operations at its mines, increase production and minimize costs.
To fulfil its growth strategy, the company is continually working with CNG and other interested parties to identify potential international mining opportunities, mainly outside of China, which can be readily and quickly brought into production with the possibility of further expansion through continued exploration.
2014 gold production is expected to be about 208,000 ounces but the company is unable to provide definitive 2014 production guidance for Jiama as the mine is dealing with reduced power supply that has affected the central Tibet region during the winter.
The Tibet Autonomous Region government and the Central Government of China are progressing a power supply development plan while the company is implementing counteractive measures to mitigate the effect of power shortages. It anticipates that Jiama will be able to resume full production in April or May. The company will then need to confirm its 2014 guidance for Jiama in mid-2014. Production in 2014 was previously expected to be about 50 million pounds.
China Gold International’s revenues decreased 9% in 2013 or from US$332.4 million in 2012 to US$302.6 million in 2013. CSH revenue accounted for 59% of the total, or US$178.1 million, down from US$223.8 million in 2012. The decline was due to the substantial drop in gold prices and lower production levels.
Revenue from Jiama accounted for 41% of the total, or US$124.5 million, up from US$108.6 million. This was mainly attributed to increased production levels and improved recovery rates.
Gold production from CSH decreased 5.8% from 139,443 ounces in 2012 to 131,418 ounces in 2013. This was partially due to lower grades of ore mined and longer recovery periods caused by the growing height of the leaching heap. Accumulative gold recovery at CSH has been steadily increasing over the last few years - from 39% in 2010 to 46% in 2011, 53% in 2012 and 54% in 2013.
The total production cost of gold per ounce and cash production cost of gold per ounce for the year ended December 31, 2013 both decreased compared with the same period in 2012. The primary reason is lower waste rock expenditures.
Copper production from Jiama increased 10% from 25,820,417 pounds in 2012 to 28,323,626 pounds in 2013. This third full year of increasing production for Jiama is mainly due to higher volumes of ore mined and improved recovery rates.
The company’s CEO Bing Liu says, “We are very pleased with the operational progress on both mines. Good production results were achieved for the sixth consecutive year at CSH. The Jiama mine achieved its third full year of increasing production. We have seen significant cost reduction on both of our mines. We have delivered on our commitment to the shareholders and completed expansion construction at CSH ahead of the schedule. We finished Jiama’s feasibility study on time.”