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TORONTO,
ONTARIO--(Marketwire - Oct. 21, 2009) - CASTLE GOLD CORPORATION (Castle
Gold, the Company) (TSX VENTURE:CSG) is pleased to provide an update on
the ramp-up in mining and gold production at its 100 percent owned El
Castillo Gold Mine in Durango State, Mexico.
Operating highlights for the third quarter ended September 30, 2009
compared to Q3-2008 and Q2-2009, include:
- New quarterly gold production record of 7,655 ounces of gold, a 65
percent increase from the year earlier third quarter period and a 19
percent increase from the previous quarter (Q2-2009) level of 6,421
ounces of gold produced.
- New quarterly record for total tonnes mined of 2,594,800 tonnes of
combined ore and waste, a 109 percent increase from the year earlier
third quarter period and a 39 percent increase from the previous
quarter level of 1,862,300 tonnes mined.
- New quarterly record for total ore placed on leach pads 1,051,300
tonnes of combined run-of-mine and high grade ore, a 116 percent
increase from the year earlier third quarter period and a 36 percent
increase from the previous quarter level of 775,100 tonnes mined.
- New quarterly record for total estimated gold placed on leach pads of
14,100 ounces, an 81 percent increase from the year earlier third
quarter period and a 21 percent increase from the previous quarter
level of 11,700 ounces of gold. The Company expects to recover 60% of
the gold from the total ounces placed on the pad.
- A monthly production record for total tonnes mined, having occurred
in September 2009 of 931,000 tonnes a 16% increase over the intended
expanded mining rate of 800,000 tonnes per month that was to be
achieved with the arrival of remaining new equipment fleet for El
Castillo.
- Engineering, purchase and construction of a portable screening plant
and related infrastructure to improve operating efficiencies of the
crushing plant for high grade material was advanced during the quarter.
The screening plant is expected to be fully operational in Q1-2010
coincident with higher volumes of gold ore being mined as the amount of
waste to be mined declines (waste to ore ratio declines), under the
current mining plan.
Thomas Atkins, President and CEO of Castle Gold commented on the third
quarter operating results stating: "Castle's Vice President
Operations Federico Alvarez and his team in Mexico together with Vice
President Project Development Darren Koningen deserve the credit for the
successful ramp-up of operations at Castillo to date. With the arrival
of the balance of the new equipment fleet during the third quarter,
production has rapidly exceeded expectations, with this occurring
despite the challenges of operating during the rainy season. During the
quarter we continued to aggressively remove waste to facilitate higher
rates of production going forward. The waste to ore ratio during the
quarter was 1.4 to 1.0 compared to the life-of-mine ratio of 0.6 - 0.55
to 1.0 expected to be achieved at this time next year under the current
mining plan. Gold production for the quarter was a new record for the
mine despite temporarily mining lower grades, as part of the mine plan,
and challenges to maintaining gold solution grades on the leach pads
during the rainy season. Management continue to pursue further
operating performance improvements in the coming months as we upgrade
the screening and crushing plant and look to increase resources and
reserves through additional drilling to the south of the currently
known El Castillo open put gold reserves."
Operating Performance - El Castillo Mine, Durango State, Mexico (100%
interest)
During the three month period ended September 30, 2009 mining rates at
the El Castillo gold mine averaged 865,000 tonnes per month, more than
double the rate of production from the year earlier period and almost
40 percent above rates achieved in Q2-2009 as mining operations
benefited from the arrival of the remaining components of the new,
larger and more efficient contractor supplied and operated equipment
fleet. During the quarter a total of 2,594,800 tonnes of material was
mined from the open pit of which 1,051,300 tonnes of ore, having an
average grade of 0.42 grams per tonne gold was placed on the leach pad.
Gold production during the quarter was 7,655 ounces.
---------------------------------------------------------------------------- Three Months Three Months Three Months Ended Ended Ended Sept. 30, 2009 Sept. 30, 2008 June 30, 2009 Operating Statistics (100%) (100%) (100%) Total tonnes mined 2,594,800 1,239,500 1,862,300 Tonnes waste 1,543,500 753,000 1,087,100 Waste : Ore Ratio 1.47 1.55 1.40 Tonnes ore-direct to leach pad 782,900 343,900 573,200 Tonnes crushed and placed 268,300 142,700 201,900 Tonnes ore placed on leach pad 1,051,300 486,500 775,100 Gold grade (grams/tonne) 0.42 0.50 0.47 Gold produced - commercial production (ounces) 7,655 4,626 6,421 ----------------------------------------------------------------------------
During
the third quarter the balance of the new equipment arrived on site. This
now includes:
- 10 CAT 740 trucks with a capacity of 40 tonnes.
- 3 CAT 988H front-end-loaders with a capacity 8.5 cubic yards.
- 1 CAT 416 excavator for lime loading on the trucks.
- 3 Atlas Copco, ECM 590 RC blast hole drill rigs.
Some components of the original fleet of smaller capacity trucks remain
on site. These trucks would be the equivalent of an additional two CAT
740 trucks. The contractor, in September was requested to operate at
volumes of production that can be achieved with the current equipment
fleet. It is evident from September's production volumes (931,000
tonnes per month) that with the current equipment and labour force,
production can significantly exceed the originally designed capacity of
this equipment of 800,000 tonnes per month. As the components of the
original fleet reach the end of their productive lives, the two new CAT
740 trucks are expected to arrive and be operational. As a result
monthly mine production is expected to approximate 900,000 tonnes per
month, the limits of the current permitting, into early 2010.
El Castillo - Additional Expansion Potential
At present, limits to capacity throughout exist as a result of planning
(pad design, timing of new pad location infrastructure), permitting and
additional contractor equipment to accommodate volumes in excess of
1,000,000 tonnes per month (no - additional CAMSA equipment is also
required). The Company is confident of its ability to increase
resources and reserves in the area to the south of the currently designed
open pit at Castillo as evidenced by results from its Phase I resource
expansion drilling program (refer to press releases dated May 21 and
June 9, 2009). The Company is near completing the re-calculation of
gold resources at El Castillo as a result of Phase I drilling and
taking into account geological controls for populations of Run-of-Mine
grade and High-Grade gold material. Result from this work will be used
to plan a Phase II drill program which, if successful in adding
additional gold reserves, such reserve additions have the potential to
facilitate a further ramp-up of production capacity to in excess of
70,000 ounces per year of annual gold production. Planning and
permitting applications are in process to facilitate these higher rates
of production and all work and permits are expected to be completed by
Q2-2010. Additional mining equipment to achieve increased production
levels is believed to exist within an approximate three month lead
time. Once planning, permitting and the a new, expanded reserve
approaches completion, such equipment can be ordered to achieve the
production objectives.
The timing of the commencement of the Phase II drill program is yet to
be defined. However, Phase II drilling is conditionally approved by the
Board of Directors, pending review of the results of the new resource
calculation and the details on number, location and cost of drilling to
potentially further expand resources in the target area and to bring
such resources into the Proven and Probable reserve categories.
El Castillo - Screening Plant
The Board of Directors, on September 24, 2009, formally approved an
approximate US$1.3 million total investment in the engineering,
purchase and construction of a portable screening plant to screen out
the fine fraction (material less than 3/4 inch) of the high-grade ore
that would otherwise pass through the contractor operated
screen-crusher plant prior to being stacked on the heap leach pads
(refer to press release dated April 2, 2009).
The opportunity to enhance the performance of the screen-crush plant
arose from observations that a large percentage of the high-grade
material that is currently being crushed, given the manner in which
this material fractures on blasting, breaks to a size fraction below
the targeted size for optimal recoveries of gold of such high-grade
material - less than 3/4 inch in size. The current contracted
screen-crusher plant equipment configuration does not permit the
screening of this fine fraction of high-grade material thereby reducing
the capacity of the existing crushing operations, resulting in reduced
recoveries of gold. The installation of this screen deck will enable the portion
of blasted, fine, high-grade material to simply be screened-out from
the coarser high-grade material allowing the crushing circuit capacity
to be significantly increased.
In the April 2009 release it was determined that on the basis of
savings in crushing costs relative to the current contractor terms,
higher volumes of production and recovery of additional ounces of gold
relative to the capacity of the current contractor equipment, per unit
operating costs are expected to be reduced by approximately 50 percent
for savings of US$34 per ounce of gold produced. The internal rate of
return on the investment of US$1.0 million is calculated at 172 percent
with a quick approximate 10 month return on invested capital. Assuming
the US$34 per ounce operating cost savings, enhanced gold recoveries
and a US$800 per ounce gold price, annual cost savings are estimated at
US$1.7 million. Based on the current mine life of 10 years at in excess
of 50,000 ounces of gold per annum and assuming a life-of-mine average
gold price of US$750 per ounce and a 5% discount rate this US$1.0
million investment produces a net present value of US$10 million based
on current reserves.
The screening plant is expected to be operational in Q1-2010 coincident
with higher volumes of ore being mined as the amount of waste to be
mined declines (waste to ore ratio declines) under the current mining
plan.
About Castle Gold
Castle Gold Corporation is a growth oriented gold producer with
projects focused in the America's. The Company owns a 100% interest in
the El Castillo gold mine in Mexico and a 50% interest in the El Sastre
gold mine in Guatemala. Castle Gold is also advancing exploration and
development work at its La Fortuna gold-silver-copper project in Mexico
and at its El Sastre and El Arenal project in Guatemala.
TSX-V Trading Symbol: CSG Total Shares Outstanding: 75.5MM Fully Diluted: 83.0MM 52-Week Trading Range: C$0.15 - $0.80
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this news release.
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