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CEO Blog - May 8, 2013
Wednesday, May 08 2013 15:35
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Production run rates exceed plan and have been achieved faster than scheduled

Question: What is the status of the short-term production goal of 400 gold-equivalent ounces per week?

Answer: I am extremely pleased to report that we have well exceeded our targeted production rate of 400 ounces per week, and achieved this rate of production ahead of schedule! Originally scheduled to exceed 400 ounces by late April, we poured 408.17 gold equivalent ounces during the week of March 17 – 23, 2013. For the next five weeks (six total) ending April 27th, we sustained a throughput averaging over 425 ounces per week. We continue improving the stability and throughput of the system and will operate at or above these levels for the rest of 2013.  We anticipate achieving the full 20,000 gold equivalent ounces this year (as compared to previous guidance of between 18-20,000 gold equivalent ounces).

Along with the pouring of gold and silver, every aspect of the production system has been stabilized or enhanced for predictable, sustainable growth. These photos demonstrate the increased rate of material placed on the heap:


  Photo of Heap: November 6, 2011  



 Another photo of the heap from November, 2012



  Photo of Heap: January 3, 2013



  Photo of the Heap: April 11, 2013; notice the completed left side of the first lift, or level.



  Another photo of the Heap from April 11, 2013

Just in the month of April we crushed and stacked over 30% more material when compared to March.  The Company is continuously adjusting its operations to improve grade, maximize yields and increase tons crushed and stacked.

During the first quarter of 2013, we completed the ramp up and stabilization activities of the production system, including improvements to the hauling, crushing and metal extraction processes.  


Photo: Mining from the Lucerne, April 13, 2013



  Photo: Hauling through “Lot 51” from the mine to the processing area in American Flat

Metal sales in the first quarter of 2013 totaled $4.2 million, with gold revenues of $3.7 million. We also produced $0.5 million of silver. Silver is accounted for as a by-product credit in costs applicable to mining revenue for financial reporting purposes. During the first quarter of 2013, the Company crushed and stacked over 234,000 dry tons of mineralized materials and shipped 2,261 ounces of gold and 15,599 ounces of silver.  Material placed on the heap leach pad remains under solution until recovery rates are optimized.   Although the daily throughput will vary depending upon the amount, type and grade of material placed on the heap and the stage of leaching of that material, the weekly average of 425 ounces reported above extends over sufficient time to demonstrate a meaningful and sustainable shift upward in our production.

The current financial analysis for the Lucerne Mine anticipates annual operating expenses, including all mining and processing costs of approximately $15.9 million per annum, excluding approximately $1 million of additional haulage costs, with an anticipated production schedule currently processing at the rate of one million tons per annum, but also including plans for ramping up to a 1.5 million tons per annum run rate.  Mine administration costs are anticipated to be approximately $1.5 million. The Company currently anticipates production rates staying beyond the 400 gold-equivalent ounces per week in the second half of the year with a current expectation of producing 20,000 gold-equivalent ounces in 2013.   The first quarter of 2013 brought our mining and processing systems into stability, enabling us to invest in future production and resource growth and accelerate the complete repayment of our secured Auramet Debt Facility, most likely well ahead of schedule.

A reminder about the Quarterly Conference Call

As previously announced, I will host a conference call on Thursday, May 9, 2013 at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to report First Quarter 2013 results and business update.

The live call will include a moderated Q&A, after the prepared remarks.  The dial-in telephone numbers for the live audio are as follows:

North American Toll Free: 1-866-544-4625

Canada Local / International: 416-849-2726


Best Regards from the Comstock,

Corrado De Gasperis

President and CEO