Troy Resources defers closure of Sandstone gold mine
Troy Resources NL has deferred the closure of its Sandstone open-cut gold mine in Western Australia for 10 months because of the firmer gold price.
The 600,000 tonne-a-year plant has been processing low-grade ore stockpiles and was slated to close next month.
But Troy said in a statement on Tuesday that it would produce 30,000 ounces of the precious metal from the operation during calendar 2009, with ore being mined from a cut-back to the pit at the Lord Nelson deposit.
The company stopped mining the Lord Henry deposit last month because the remaining ore was not of a high enough grade.
However, remaining ore from the Lord Nelson pit was economic to treat at the current gold price, Troy said.
Spot gold was was trading at $US826.30 per fine ounce on Sydney at 1611 AEDT on Tuesday, up from the 2008 low of $US712.50 an ounce in October.
"The remaining ore at Lord Nelson is low grade and thus the production will be relatively high cost, but at these Australian dollar gold prices, this is a value-creating exercise for Troy," the miner said.
It said the financial risk associated with mining low-grade ore had been minimised by the purchase of Australian dollar gold put options totalling 29,200 ounces with a floor price of $A900 per ounce and maturity between April and December this year.
The options maintained Troy's full exposure to any increase in the Australian dollar gold price, the company said.
Troy WA operations manager Keith Ross told reporters the company would explore for new deposits in the project area for processing through the existing plant in coming years.
The company said exploration costs had fallen significantly in the past six months.
Ross said the equivalent of 50 to 60 fulltime jobs had been retained by deferring the mine closure.
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