There was no movement in AIM-quoted West Africa-focused junior miner Cluff Gold Plc.'s shares on Thursday when the company announced that it was ramping up production at its Angovia mine in Cote d'Ivoire and would bring its Kalsaka operation in Burkina Faso on stream in August.
Cluff Gold said it expected to produce 20,000 ounces of gold by year-end and over 40,000 ounces in 2009 from the Angovia mine. The Kalsaka project, when it comes on stream, would add 60,000 ounces of gold to its production in West Africa.
But despite the good prospects of these two projects, the market decided to adopt a wait-and-see attitude, leaving Cluff Gold's shares unchanged at 75.75 pence. What was noticeable in Chairman and CEO Algy Cluff's statement at the company's AGM on Thursday was the fact that Cluff Gold would not achieve its annualised target of 100,000 ounces this year. This target was announced on September 24 last year, in a move that pushed Cluff Gold's shares up by over 2.00 pence.
The company also delayed bringing the two projects on stream. In September, the yet to be fully commissioned Angovia - located 40 kilometres northwest of Cote d'Ivoire's political capital, Yamoussoukro - had been slated for production by the end of 2007, with the company confident that the Kalsaka project would come on stream early this year. Cluff had confidently described such as move as an important milestone in our short history.
In his speech however this week, Cluff noted the delays in bringing the two projects on stream. He said Angovia's production start up was slightly behind schedule largely due to the late delivery of equipment. The Kalsaka project had been delayed by the difficulties of shipping equipment into Burkina Faso, Cluff told shareholders.
I should like to emphasise the fact that we will have brought these two mines onto production at a construction cost of under $40 million. To achieve 100,000-plus ounces of production at such a low cost is, in my opinion, no mean achievement in the atmosphere which prevails in the mining industry, said Cluff.
To date, Cluff said, Angovia - which is expected to be fully commissioned in July - has produced 2,400 ounces of gold since March and Cote d'Ivoire, preoccupied with a general election slated for November, is in a stable condition and, in the company's opinion, there exists evidence of increased commercial activity.
We believe that the fact that we remained steadfast as investors in the country during their difficult times is now bringing us the reward of production and we believe our loyalty has not been lost on the country's establishment, he said.
Cluff Gold however says construction at the Kalsaka project in on schedule to August's start up. The project, located about 150 kilometres north west of Ouagadougou, the capital of Burkina Faso, has an estimated resource of 790,000 ounces measuring 13.7 metres per ton at 1.4 grams per ton.
The company says Kalsaka contains an oxide gold mineral resource that has already been demonstrated by a feasibility study to be technically amenable to open-pit mining and processing via heap leaching.
It is also making solid progress, according to Cluff, in Sierra Leone where it recently completed a conditional agreement to acquire Winston Mines' remaining 40% interest in the Baomahun Gold Project, which will give it 100% ownership of the project.
We expect our pre-feasibility study to be completed by the end of this year with the majority of 2009 being concerned with the preparation of the bankable feasibility study which is necessary to secure the project finance, said Cluff.
Baomahun will be developed during the next two years into Cluff Gold's biggest mine in West Africa, with a productive capacity of over 200,000 ounces a year.