Cannon Gold Mine: Update
- Southern Gold projected cash position $8m in July 2017
- Adit to access residual high grade ore nearing completion with processing scheduled to commence in late June
- Cannon underground options being assessed
Cannon Open Pit Mine Update
Southern Gold is pleased to provide the following update on the Cannon Gold Mine, 35km east of Kalgoorlie, WA. Mining at the Cannon Gold Mine is being conducted by Westgold Resources Ltd who financed and developed the deposit under a 50/50 profit share arrangement.
Development of the Cannon adit at the base of the open pit is nearing completion with the stoping phase to be completed during June (Photo 1 and 2, next page). The adit is designed to safely mine high grade ore at the base of the pit that had been impacted by very high rainfall exacerbating geotechnical instability.
The next processing campaign has been scheduled to begin late June 2017 with current modelling indicating the recovery of approximately 4,000 oz. Au.
Modelling of the financial outcomes indicates that, at the current gold price of A$1700/oz, the final payment to Southern Gold from the Cannon account will be approximately $3.5 million, taking total payments to $14 million since December last year.
A portion of the $14 million in funds has been directed by Southern Gold to repaying approximately $3.8m of debt facilities, including interest, to various debt holders. Last month Southern Gold also closed out its hedge facility of 2,500oz Au at a fixed forward price of A$1,621/oz and currently remains unhedged.
Southern Gold has an unaudited cash position of $4.8 million and assuming the $3.5 million payment mentioned above is received during July 2017, cash projected to be held by Southern Gold is expected to be approximately $8 million.
Cannon underground options under assessment
Southern Gold is now actively reviewing several scenarios for an underground phase at Cannon. The objective is to determine if a sustainable underground operation can be developed on the high grade Cannon shoots currently identified up to 80m below the base of the pit. To assist with this an experienced mining executive with substantial underground experience has been engaged to review different development scenarios. Integrated into this assessment is planning for deeper drilling below the currently defined resource envelope.
Results from this review, including any potential commercial arrangements around the preferred scenario, are expected to be announced over the next few months.
Photo 1: Overhead view of adit entrance, looking South at base of Cannon Pit
Photo 2: Cannon Gold Mine Adit Entrance
Photos courtesy of Westgold Resources Ltd