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"Berezitovy Mine" reduced the cost of gold production in the first half of 2014 by 19%
The Berezitovy Rudnik gold mining enterprise (Amur Region, Russia), which is part of the international company Nordgold, at the end of the first half of 2014, due to increased production efficiency, increased production and strict cost control, achieved a 19% reduction in the cost of gold production, taking into account capital investments , to $ 761 per ounce against $ 943 in the first half of 2013.
Note that the cost of capital, taking into account capital investments, characterizes the costs of an enterprise to maintain production and represents the sum of the total cash costs and capital investments necessary to maintain a constant current level of production.
“The gold mining industry is still facing negative trends associated with the decline in gold prices. Berezitovy Rudnik is countering the negative environment by continuing to improve production efficiency and achieve significant cost savings. The total cash costs of the mine in the first half of 2014 decreased by 23% to $ 635 per ounce against the backdrop of an increase in ore extraction and processing, a significant decrease in the stripping ratio, ”explained Denis Ryzhkin, Executive Director of Berezitovy Rudnik LLC.
The company's management aims to ensure that the mine will increase its positive free cash flow in 2014. To achieve this goal, Berezitovy Mine uses a balanced approach to managing costs and capital investments, and optimizing working capital. Since the beginning of the year, a number of measures have been taken to reduce the stocks of consumables and raw materials at the mine.
Total cash costs at Berezitovoye are being cut on a quarterly basis. For example, in the II quarter of 2014 by 10% compared to the I quarter of 2014 - up to $ 605 per ounce. The decrease was achieved mainly due to an increase in gold grades, recovery rates and production volumes, while reducing costs for materials and spare parts, as well as due to a decrease in diesel fuel and electricity consumption for heating in the spring-summer season. Cost savings were also driven by lower consumption of grinding balls, tires and explosives, as well as lower repair rates for grinding equipment and mining equipment.
The volume of capital investments of "Berezitovoy mine" in the first half of 2014 amounted to $ 5 million, of which $ 4,7 million were capital investments to support the business, and $ 0,3 million was directed to exploration and appraisal.
At the end of the first half of 2014, gold production at Berezitovoye increased by 4% to 59,0 thousand ounces (over 1 ton 835 kg). This growth was driven by an increase in ore mining and processing. Berezitovoy's revenue from gold sales in the first half of 2014 amounted to $ 76,8 million, with an average realized gold price of $ 1298 per ounce.
The total volume of the company's production in the first half of the year amounted to 7 million tons, including 6 million tons of gangue and 1 million tons of gold ore. The stripping ratio decreased by 19% to 6,07. In 2014, the stripping ratio is projected to be between 6,0 and 7,0.
“The production optimization programs implemented at Berezitovoye are yielding results: operational efficiency increases, general and administrative costs, key material costs are reduced, and mine costs are reduced. Ultimately, this will allow Berezitovoy not only to withstand difficult market conditions, but also to achieve an increase in positive free cash flow in 2014, ”concluded the head of the mine Denis Ryzhkin.
LLC Berezitovy Rudnik, part of the international gold mining company Nordgold, is developing the gold-polymetallic deposit of the same name, located in the Tyndinsky District of the Amur Region, 130 kilometers from the Skovorodino railway station. The development of the Berezitovoye deposit has been going on since 2007. The deposit is currently being mined in an open pit using the CIL (coal in solution) process and heap leaching. At the end of 2013, Berezitovy Mine recorded a record volume of refined gold production in the amount of 120,3 thousand ounces (3,740 tons) compared to 116,3 thousand ounces (3,617 tons) in 2012.