Low gold prices are taking their toll on
In the 3-month period ended June 30, Nelson lost US$674,000 (1 cents per share) on revenue of US$3.29 million, bringing the loss for the first six months of 1999 to US$803,000 on US$7 million. By comparison, the company earned US$421,000 on US$4.98 million in the second quarter of 1998 and $635,000 (1 cents per share) on US$8.92 million in the first half of that year.
In the second quarter, Jilau cranked out 21,011 oz. at a cash cost of US$239 per oz. — 26% lower and 12% higher, respectively, than in the first quarter. Nelson has since cut back on staff and renegotiated supplier prices in an effort to decrease costs to US$200 per oz.
In total, 1.7 million tonnes were mined, consisting of waste from the Main pit and 481,762 tonnes of low-grade ore from the North pit. A scheduled switch in mining to the Main pit is being delayed six weeks, owing to a necessary relocation of the ramp to avoid a weak area discovered in the west wall.
At last report, open-pit reserves stood at 7.9 million tonnes grading 1.29 grams gold per tonne. The estimate is based on a cutoff grade of 0.8 gram gold.
Meanwhile, underground development of the nearby Taror deposit is being delayed while outside financing is sought. Work in the second quarter included development of another 322 metres of workings.
A first-phase feasibility program pegged underground reserves at 3.7 million tonnes grading 4.84 grams gold, using a cutoff of 3 grams. The sulphide ore is sufficient for seven years of production and would be blended with ore from the Jilau pit, boosting combined annual production to 100,000 oz.
Total development costs are projected at US$10 million, and operating costs until 2002 are expected to remain about US$200 per oz. The average cash cost over the life of the reserves is US$239 per oz.
The Taror and Jilau mines are owned by Zeravshan Gold, a Tajikistani company owned by the government, with 51%, Nelson Gold, with 44%, and International Finance Corp., with 5%.
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