HER - ASX Company Announcement
$gen0 THIS IS A PRIORITY ITEM
10 January 2003
Part 1/1
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HERALD RESOURCES LIMITED
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HOMEX - Perth
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Coolgardie Gold Project Update
As earlier advised in 2002, the Herald Group arranged non-recourse
finance facilities of $7m to finance its 50% share of the anticipated
capital and development costs of the Coolgardie Gold Project.
MPI Mines Ltd, the managers of the Project/JV, have presented a
budget for calendar 2003 operations, which shows a total project
funding requirement for Herald of $9.5m, or $2.5m greater than the
above finance facilities. This shortfall is budeted to peak late in
2003.
Herald presently has $3.4m cash on hand. Nevertheless discussions
have been initiated with the JV's financiers to look at methods of
providing the additional funding. Additionally, scheduling and other
changes are also being considered by the JV to defer cash outlays.
The main variations from the original feasibility study have arisen
due to the following:
- A late start to open pit mining at Lindsays which meant that the JV
missed a large portion of its milling "window" in October and treated
low grade stockpiles instead. While this ore has not been lost, the
deferred ounces of gold production have impacted on the timing of
cashflows.
- An overrun in the refurbishment costs of the mill, due o the scale
of refurbishment not being recognised by consultants. Intermittent
breakdowns since commissioning have reduced throughput, with
attendant increases in operating costs.
- MPI has re-optimised one of the ore sources, the Lindsays open pit,
resulting in a reduction in ore grade from this source from 2.1 g/t
to 1.9 g/t for budget purposes.
The project is now operating at close to planned levels:
- Production results from December and early January indicate a
marked increase in throughput and associated reduction in costs, and
further improvement is still targeted.
- Notwithstanding the reduction in the budgeted Lindsays grade, no
adjustment is presently being made to Lindsays ore reserves until
actual productio reconciliation has been undertaken to compare
against the ore reserve model.
- Development, and mining of ore from the high-grade Empress deposit
continues on schedule, ready for treatment in the JV's next milling
window in February.
- The exploration program which resulted in the encouraging hits
during the December quarter at the Big Blow prospect will re-commence
in January after the New Year break.
M P Wright
EXECUTIVE DIRECTOR
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