re: michelago says gold production to reach 300,00 WRAP -Michelago says gold production to reach 300,000 oz by 2008
AAP News
19:08:020 9/02/2005
MELBOURNE, Feb 9 AAP - Sydney-based gold explorer turned
producer Michelago Ltd expects to boost production to 300,000
ounces a year within three years from projects in China and the
Solomon Islands.
Michelago is in the final stages of purchasing an 82 per cent
stake in the BioGold processing facility in China's Shandong
province with production expected to reach 140,000 ounces by mid
2006.
At the same time the company has spent $90 million acquiring and
developing the abandoned Gold Ridge mine in the Solomon Islands
with production expected to reach 75,000 ounces by the middle of
next year.
The Gold Ridge mine was closed in August 200 when political
unrest forced its evacuation.
Michelago chief executive Greg Starr told a briefing in
Melbourne today that the country was now stabilising and the gold
mine with its 1.67 million reserves was expected to be back in
production by mid 2006.
Production is expected to reach 150,000 ounces a year with a 10
year mine life.
Meanwhile the BioGold facility was currently producing 170,000
ounces year of ore sourced from small gold miners across the
country.
The facility had plenty of growth potential with exposure to
China's 6.8 million ounce a year gold industry, Mr Starr said.
Unlike Australia where the bulk of gold is processed on site, in
China gold mines are more numerous and on a smaller scale, with
miners preferring to sell ore to centralised processing plants.
BioGold would purchase the ore at a percentage of the gold price
depending on its grade and purity and process it using bacterial
oxidation technology which is new to the country.
The technology is environmentally friendly giving BioGold an
edge as Chinese plants come under pressure to clean up their
techniques.
The total production cost, including purchase of the ore is
expected to make up between 823 to 85 per cent of the spot gold
price leaving a 15 per cent margin, Michelago said.
Funds from the projects will be used to grow the company through
further acquisitions with a particular focus on China where
Michelago's exposure to gold mines through the BioGold facility
would give it a heads up on opportunities as they arose, Mr Starr
said.
Mr Starr today conceded the company had fallen behind its target
dates regarding the Bio Gold purchase but said final conditions and
debt funding should be settled by April 2005.
Michelago shares closed today 0.1 cent firmer at 6.9 cents.
AAP jmw/jcc
MIC
michelago limited
