The mining operation at Victoria's most famous gold mining centre of Bendigo, now into trial mining after a disastrous start two years ago, is again generating at least an operating profit.
Bendigo Mining (ASX: BDG) today announced an operating profit for the December 2008 half year after resuming mining and milling operations late in June.
The gross profit of $A270,000 ($US174,800), based on revenue of $A12.72 million ($US8.24 M) came from processing 59,710 tonnes at the company's Kangaroo Flats mill for 13,921 ounces at a gold grade of 8.1 grams/tonne.
The modest profit was negated with offsets including exploration costs to find new targets in the labyrinth of gold reefs - generally under the city of Bendigo - and the half year result was a loss of $A2.45 M ($US1.58 M).
Chief financial officer and company secretary, Tim Churcher, said the gold price achieved for the half year was $A1,126/oz ($US729/oz) and that the company retains a strong cash balance of $A44.9 M ($US29 M) at the end of December.
He said exploration drilling for the six months totalled 16.6 kilometres and the highlights were discovery of the Nankervis and Dunlop reefs on the Nell Gwynn and Deborah lines and extension of the Gill Reef found on the Garden Gully Line.
Churcher said trial mining will continue on the Gill and other reefs and the exploration focus would remain on defining mineable reefs close to modern workings.
Bendigo was one of Australia's first major goldfields though mining ceased with a flagging gold price and the loss of workers to the First World War.
Bendigo Mining raised a substantial amount of cash to re-establish mining on the outskirts of the city but the first reefs accessed showed why they were not as intensely worked as those now covered by the city. As mining under-performance proved a shock to both investors and market observers and mining and milling was curtailed and major management changes occurred.
Fortunately Bendigo had undertaken major capital raisings and the re-shaped management set about finding unmined zones and new reefs in the more central areas of the Bendigo field to achieve economic grades.
The original schedule was for operations to ramp up to 200,000 oz by next financial year and then 600,000 oz a few years later, through development of a second decline mine.
While today's position is a far cry from that projection it is nonetheless comfortable progress after the disastrous under-performance and clear need to find new and higher grade ore positions.