The mined grade at Kingsrose Mining’s Talang Santo Gold-Silver Project is progressively improving. The reconciled head grade for December was 9.5 grams/tonne gold and the company expects continued improvement during the current quarter.
During the December quarter there were 5465 ounces of gold and 16,870 ounces of silver produced while underground development continued.
Mining activity in the quarter focused on completion of development for commencement of stoping activities in the main ore zones on the 2 and 3 Levels. There were 1263 metres of lateral development and 557 metres of vertical development completed during the period, including completion of the vertical development on the internal shaft to the 4 Level as scheduled by mid-December.
The trial stoping in Zone A of the Splay vein between the 2 and 3 Levels was completed during the period. A total of 7142 tonnes @ 8.50 grams/tonne gold and 37 grams/tonne silver has been mined project to date. The result was influenced by failure in stopes and lower mining recoveries related to the placement of rib pillars to mitigate this. Evaluation of further stoping in the narrower sections of Zone B above the 3 Level is ongoing where short length high grade shoots were identified in development. Development is planned on sub-levels below the 3 Level and from the 4 Level in the current quarter.
With the establishment of stoping activities on the 2 Level early in the fourth quarter it became apparent that additional ground support would be required to safely recover ore from these areas. This resulted in a reduction in the anticipated mining rate from these higher grade stopes which had been a key component of the scheduled production ramp-up. This contributed to the revision of guidance for production in the 2015 financial year from 40,000 ounces of gold to a range of 30,000-35,000 ounces.
Definition drilling on the 2 and 3 Levels during development highlighted a number of wider sections of mineralization within the main ore zone, where the Hanging Wall and Mawi veins coalesced in areas of local structural dilation along the ore body. A mine plan to maximize the recovery of these wider areas was completed and implemented in late November.
This required further development around the existing workings and additional ground control measures to be installed in-cycle to support mining in the wider areas. Due to the set-up required and additional ground control measures to maximize recovery, there was in a drop in mining rates in the latter half of the quarter.
During the period, development continued on the internal shaft from the 3 to the 4 Level with the shaft reaching the target depth by mid-December. The remainder of the period focused on completion of the shaft sump and establishing development from the shaft onto the Level. The focus of activity in the current quarter will be on establishing pumping infrastructure on the Level prior to accessing the ore body.
During the December quarter work commenced on the sinking of a second vertical shaft at Talang Santo to the 5 Level. This will provide a direct access to the higher grade sections of the main ore body indicated by drilling and also allow development to be undertaken to evaluate the potential of the Central and North West Mawi prospects. A key benefit is the establishment of services for pumping and electrical reticulation for accessing the deeper part of the mine which will reduce future capital requirements. In the latter part of the quarter, a pilot and geotechnical hole was completed as well as site works.
It is expected to take 12 months to reach the 5 Level (ground conditions and water dependent).
Meantime, Kingsrose has agreed with its lenders, Beaurama Pty Ltd and Advance Concept Holdings (ACH) to restructure the repayment profile of its loan facilities. Under the previous terms, the Beaurama Loan Facility and the ACH Loan Facility were required to be repaid over 10 instalments, commencing in January 2015 with final repayment due in October 2015. Under the revised terms, the debt will be repaid over 20 instalments commencing in July 2015 with final repayment due in February 2017. Interest is payable monthly in arrears and the applicable interest rates remain unchanged. No restructuring fees were charged by the lenders.
In addition, the US$5 million ACH facility has been assigned equally to Great Golden Investment and Michael John Andrews, both related parties of the company. Each has agreed to accept the assignment of the ACH Loan Facility.