Half Year Report for the 6 months ending 30 June 2011
In 2011 Dragon Mining Limited ("Dragon Mining") embarked on an extensive exploration, development and capital expenditure program, investing in the future of the company.
Exploration was directed at enlarging the reserves and resources at the existing mines, as well as expanding the resources at the exciting Kuusamo Gold Project in northern Finland to enable the project to advance to a feasibility study in 2012.
Development includes a significant cut back and driving a decline at Svartliden in Sweden, establishing an underground mine at Jokisivu and extending the Kutema decline at Orivesi in southern Finland.
Capital expenditure included purchasing new mining equipment for Orivesi including a development drilling jumbo which was delivered in June.
The half year results reflect expensing all the waste costs associated with the large cutbacks at Svartliden, treating ore from low grade stockpiles at Svartliden, remnant ore from pillars at Kutema and development ore from Jokisivu. This is a transitional period and the half year results should be placed in perspective with the Company's long term objectives.
INCOME STATEMENT
- Revenue from gold sales was $32.2m (2010: $49.3m).
- Gross profit from operations was $2.1m (2010: $20.8m).
- Net loss after tax was $0.9m (2010: profit of $21.3m).
CASH AND TRADE RECEIVABLES
- Group cash at 30 June 2011 of $21.6m.
- Trade receivables from gold concentrate delivered and bullion on hand of $3.7m.
- Cash flow from operations was $7.2m (2010: $15.5m).
OPERATIONS
- Gold production for the half year of 24,329 ounces (2010: 36,322) at an average cash cost US$1,228/ounce (2010: $US624/ounce).
EXPLORATION
- Dragon Mining invested a total of $5.0m on exploration in Sweden and Finland, directed particularly on increasing the resources at existing mines and the Kuusamo Gold Project.
- The Kuusamo Gold Project is an integral part of Dragon Mining's plan to significantly increase production in coming years, with the company seeking to capitalize on the excellent potential.
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