Underground high-grade gold miner KAU reported a sharp lift in...

Underground high-grade gold miner KAU reported a sharp lift in gold production in the Sept. quarter from the June quarter with costs per ounce falling, metrics that are generally welcomed by investors.

but high expectations for the Sept. quarter held by some weren't realized, weighed down by lower grades of ore processed and some commissioning problems at the Maldon mill after extensive rejuvenating capex was completed in June.

here's how KAU reported some of the major events during the period.

"Mine production and investment remained heavily focused on the development of the mining fronts to support the increased production rates and some of the higher-grade lodes were not shipped to the mill for blending with lower grade stocks until the end of the Quarter which has created some timing issues for revenue during this reporting Quarter," it said.

"Production and recoveries were also impacted by commissioning challenges at the mill associated with calibrating the new cyclones. The cyclones are now operating well and the mill is seeing an improvement in both grinding and classification efficiency. This initiative will also improve stability and we are seeing improved recoveries going forward, despite early teething challenges," KAU reported

the company reported that in the Sept. quarter it produced 2,940 ounces of gold for revenue of A$8.7 million at a cost of A$5.9 million. The same figures for the June quarter were 2,075 ounces produced for revenue of A$6,1m with costs also A$6.1m.

grades of gold processed in the latest period of 7.83 g/t fell from 8.13 g/t previously.

cash at bank rose to A$3.8m from A$3.2m previously..

KAU's SP, which ran up late last week, took a hit today dropping 2c or 10% to settle at 18c.

if nothing else changes during the December quarter, the run up in the Australian dollar price of spot gold to now be quoted at A$3,139/oz should ensure improved results in the current period.. KAU sales averaged A$2,951/oz in both the June and Sept. quarters.

spot gold was quoted around 8pm Sydney time at US$1,981/oz.