CRATER Gold Mining sold first gold of 17.4 ounces from the processing of ore at the High Grade Zone project at Crater Mountain PNG, the company announced on 8 May.

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

Mining of targeted high grade intersections of gold bearing vein sets will commence soon, the company said.

Mining capacity is currently at the implementation stage, with full capacity anticipated in approximately three months as the mining plant upgrade is completed.

Crater Gold Mining managing director Russ Parker said he was looking forward to ongoing cash flow, as the company aimed to establish itself as a profitable gold producer.

“When we reach mining plant capacity, we anticipate producing some 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,” he said.

The recommencement of gold mining at the company’s 100 per cent owned high grade zone mine was announced in Crater’s March quarterly report.

Crater said drive development had recommenced on three gold bearing veins within the high grade zone delineated from previous underground development and diamond drilling carried out in 2014.

Additional drives will be commenced, increasing the number of headings being developed concurrently to seven.

An inquiry undertaken by the Mines Safety Inspectorate resulted in a relaxation of cessation order, with the inquiry results advising Crater Gold did not cause or contribute to a motor vehicle accident that occurred at the Crater Mountain site in November 2014, the company said in its quarterly report.

A non-renounceable pro rata rights issue of one share for every four shares at A$0.09 per share to raise up to A$3,069,794.70 before costs was announced by the company in its quarterly report.

Funds raised will be used to repay loans which were taken out to finance ongoing expenditure at the high grade zone mining project, for general working capital purposed and to cover the costs of the rights issue, Crater said.