Crater Gold Mining (ASX: CGN) should trade higher after reporting smooth progress towards first gold production from the High Grade Zone project at its Crater Mountain project in Papua New Guinea.
A mining plant is currently being commissioned and installed, rail and underground rail trucks are on site, and recent drilling results will enable detailed mine planning.
Crater Gold had in May estimated first year production at 10,000 ounces per annum at a cash cost of US$394 per ounce.
The Application for a Mining Lease with a Proposal For Development application was lodged with the Papua New Guinea Mineral Resources Authority at the beginning of May 2014.
The HGZ is earmarked to commence gold production subject to the outcome of the mining lease application.
In support of the submissions to MRA, the Company has completed and reported the results of fourteen diamond drill holes at sufficiently close spacing to give confidence to geological and structural interpretation to enable modelling for a maiden resource.
A small scale but high grade underground gold mining operation using hand held mining methods is proposed.
Metallurgical processing will be by simple gravity concentration via crushing, milling with a wet hammer mill and concentration using a centrifugal concentrator.
The plant is of such a scale that in the initial phase it will be used for bulk sampling individual parcels of mineralised material currently stored on surface from the rock extracted during development of the drive and cross cuts.
Regulatory processes have progressed while the necessary submissions have been made to the Department of Environment and Conservation for an Environmental Permit applicable to the proposed scale of mining.
Drilling results from June included Bonanza grade gold of 191g/t over 0.5 metres from 48.5 metres, along with broader, lower grade intervals.
The best broad intercept from the most recently reported results consisted of 55 metres at 1.02g/t gold from 17 metres, including 1 metre at 5.21g/t and 1 metre at 11.6g/t.
