tanami at last preparing for first gold

Tanami at last preparing for first gold from new WA mine

16/5/06 - After 12 years of exploration and an abandoned mine plan, junior explorer Tanami Gold Nl is finally preparing to pour the first gold bar at its Coyote project in Western Australia.

Tanami Gold has started mining at the project ahead of its first gold production in June with an opening ceremony planned for later this month.

Managing director Denis Waddell said the move into production coincided with a booming gold price, currently trading around $US700 an ounce, and could add $20 million to first year revenue.

"It's a really significant move," Waddell said.

"The outlook is that $US1000 an ounce is not out of the question ... that is one of the reasons why we haven't hedged."

Coyote, located on the western edge of the Tanami desert, will produce 60,000 ounces of gold in the first year, ramping up to 100,000 ounces by its third year of operation.

A plan to mine the deposit was abandoned in April of 2005 when rising costs pushed total development costs past $30 million, making profit margins negligible.

A reworking of the mine plan with a focus now on precision mining rather than a bulk mining approach has helped reduce the cost to around $10 million.

Waddell said this would be funded by equity already raised.

"We looked at a bigger development," he said.

"But with the blowout of capital costs we stepped back."

Tanami acquired the Coyote mine from AngloGold Australia in November 2003 for $14 million, complimenting Tanami's already extensive land holding in the area.

Waddell said there was potential to add further ounces to the resource at Coyote, with anything within a 50 kilometre distance able to be trucked to the mine for processing.

He said it would be an unbelievable day when the first cheque for from the gold came in, planned to be in June.

"I will wonder what's struck me to see cash coming in the door without issuing shares," he said.

While mining has already begun at Coyote the treatment plant is still on its way - on the back of 28 semi-trailers.

http://www.industrySearch.com.au/news/viewrecord.asp?ID=20213