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Media Release: Highlights from Quarterly Report 30-6-98

Document date:  Fri 17 Jul 1998
Published:  Fri 17 Jul 1998 00:00:00
Document No:  149380
Document part:  A
Market Flag:  N
Classification: 

HOMEX - Perth                                                         

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RECORD GOLD PRODUCTION FOR THE FINANCIAL YEAR

Sons of Gwalia Ltd said that attributable gold production for the
financial year ended 30 June 1998 was a record 517,978 fine ounces.

Gold production for the quarter was 135,557 fine ounces

The Company said that cash costs for the year were $372.65 and fell
substantially in the June quarter to $350.43, a reduction of
approximately $22 or 6 per cent per ounce, on the annual figure.

All gold sold during the quarter was delivered at an average price of
$665.00 per ounce generating a cash margin of $315.00 per ounce.

Gold production from the Company's various mines was:

     Mine              Qtr ended              Year ended
                        30/6/98                 30/6/98

Sons of Gwalia          40,897                  113,767
Marvel Loch             17,052                  90,008
Yilgarn Star (70%)      21,973                  88,417
Nevoria (75%)           9,984                   42,643
Bullfinch               25,469                  97,562
Laverton                11,272                  47,494
Salsigne (50%)          8,910                   38,087
TOTAL (fine ounces)     135,557                 517,978
    

RECORD TANTALITE PRODUCTION AND SALES

The Company said that tantalite production of 877,281 lbs and sales
of 864,138 lbs for the financial year were both-records for the
Company.

1998/1999 BUSINESS PLAN AND BUDGET

The Company said that it has completed its Budget and Business Plan
for the 1998/1999 financial year and that it estimated
gold-production for the year of 490,000 fine ounces at a cash cost of
$345 per ounce, a reduction of $28 or 7 per cent, compared to the
199711998 year.

The Company said that it had reviewed the operating parameters of
each of its mines and had decided to close the Nevoria milling
facility adjacent to the Yilgarn Star Mine and also place its
Laverton-Mine on care and maintenance pending final agreement on
Native Title claims over the nearby Red October deposit.

These closures would be offset by increased gold production at both
the Sons of Gwalia and Marvel Loch Mines and gold production would,
therefore, only be marginally less than the 1997/1998 year.

Tantalite production would be maintained at current levels and
production and sales of lithium, tin and silica sand would increase.

FURTHER ENCOURAGING EXPLORATION RESULTS IN THE SOUTHERN CROSS REGION

The Company reported the discovery of a new zone of mineralisation at
the Axehandle project, situated six kilometres south of the
Cornishman Deposit near Southern Cross. The zone of mineralisation
has been established over a strike length of 800 metres, and is open
at depth and along strike to the north. Better intersections
included:

14 metres at 6.71 g/t gold from 90 metres
11 metres at 5.48 g/t gold from 71 metres
 8 metres at 8.35 g/t gold from 98 metres
 8 metres at 5.59 g/t gold from 87 metres

The Company also said that a drilling programme to test the potential
for underground mining at the Marvel Loch Mine provided encouraging
results. In the central part of the current open pit, better results
received from drilling during the quarter included:

20 metres at 3.65 g/t gold from 388 metres
 9 metres at 5.45 g/t gold from 289 metres
17 metres at 4.73 g/t gold from 264 metres
 4 metres at 8.82 g/t gold from 190 metres
 5 metres at 5.30 g/t gold from 347 metres


POSITIVE RESULTS FROM FURTHER EVALUATION AND DEVELOPMENT OF
UNDERGROUND MINING AT THE SONS OF GWALIA MINE

The Company advised that the decline currently being developed from
the bottom of the existing open cut at its Sons of Gwalia Mine was on
time and budget.

The Company also said that it had been evaluating the potential for
mining below the planned level of the existing underground mine plan
below the existing reserve base of 700 metres.

The old mine workings extended to 1,000 metres and previous drilling
by the Company between March 1986 and May 1989, had reported
encouraging intersections to a vertical depth of 1,200 metres
including:

2.6 metres at 6.9 g/t gold from 1,590 metres
2.1 metres at 7.8 g/t gold from 1,357 metres
7.8 metres at 6.6 g/t gold from 1,369 metres
1.6 metres at 18.0 g/t gold from 1,330 metres

The Company said that two independent engineering studies had
indicated that mining of the resources, above and below 700 metres,
by way of an incline shaft was economically viable. As a result of
this, the Company said that it would commence a drilling programme to
further test the potential depth extensions of the Sons of Gwalia
Mine below 1,000 metres.

HEDGE BOOK AND ORE RESERVES AND RESOURCES MAINTAINED

The Company said that, at the end of the financial year, its hedge
position totalled 4,488,402 ounces comprising primarily put options
and a limited number of forward sales contracts.

The Company also said that it had conducted its annual review of its
ore reserves and resources which had resulted in an increase as
against the previous year.

As at 30 June 1998, the Company's proved and provable ore reserves
total approximately 3.5 million ounces and combined reserves and
resources totalled approximately 7.67 million ounces.

SUMMARY

The Executive Chairman of the Company, Mr Peter Lalor, said:

"The June quarter result was a good one with strong production on all
fronts and substantially lower cash costs. Gold production for the
year was a record, as was the Company's tantalite production and
sales."

Mr Lalor also said:

"Our forecasts for the 1998/1999 year are excellent and the Company
is now in a strong position to move forward and look for new growth
opportunities".



For further information please contact:

Peter Lalor, Executive Chairman,
Chris Lalor, Executive Director, Legal & Commercial
David Paull, Manager, Business Development

or our home page on www.sog.com.au

Tel: (08) 9263 5555        
Fax: (08) 9481 1271
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