CRATER Gold sold its first gold of 17.4 ounces (oz) from the processing of ore at the High Grade Zone project at Crater Mountain in early May, the company said in its June quarterly report.

The average recovered grade was 6 grams per tonne of gold, with gold recovered from a combination of mostly low and some high grade development drives and processed through the company’s bulk sampling gravity separation plant.

Crater said this represented a major milestone and its first gold sale in the history of the company.

Gold production is continuing on an ongoing basis and a gold production update will be announced in due course, the company said.

Mining capacity is currently being upgraded, with full capacity anticipated by September 2015 as the mining plant upgrade is completed.

Upon reaching mining plant capacity Crater anticipates producing 10,000 ounces of gold in the first full year of production, at an all-in cash cost of below $400 per ounce average over the mining lease term.

The High Grade Zone project is a high margin operation and Crater said it will generate strong cashflows, which will fund further expansion at the mine and enable further exploration activities at the company’s other assets.

During the quarter, drive development commenced on three gold bearing veins within the High Grade Zone delineated from previous underground development and diamond drilling carried out in 2014.

Crater said the veins are being developed at a narrow width and additional drives will be commenced, increasing the number of headings being developed.

Additional drives are scheduled to be commenced as site infrastructure is upgraded with a larger compressor, generator and gravity separation plant.

In the June quarter, Crater concluded a non-renounceable pro rata rights issue of one share for every four shares at $0.09 per share to raise up to $3,069,794.70 before costs.