Despite failing to turn a third-quarter profit,
The London, England-based company earned US$575,000 on revenue of $13.3 million in the 9-month period ended Sept. 30, compared with a loss of US$2.4 million on $11.8 million in the comparable period of 1997. Last year’s loss reflects a US$2.7-million writedown on certain mining interests.
Gold production between the two 9-month periods rose nearly 17,000 oz., to 74,007 oz.
Nelson owns its 44% interest in the Jilau mine through an equivalent equity interest in Zaravshan Gold (ZGC). The remaining interest is held by the government of Tajikistan.
About 1.2 million tonnes grading 2.28 grams gold per tonne were milled up to Sept. 30 — 75% more than in the first nine months of last year. The increase reflects an expansion program completed in late 1997.
Third-quarter losses amounted to US$60,000 on revenue of $4.4 million, compared with US$113,000 on $3.9 million in the year-ago period. Despite the loss, Nelson raised $7.3 million in two share offerings. The funds were used to repay a $3.6-million loan and convert an outstanding debenture into 6.4 million shares.
Nelson has more than 114 million shares outstanding, 27.9% of which are owned jointly by Liverpool Limited Partnership and Westgate International.
In the recent quarter, Nelson produced 24,713 oz. gold, compared with 4,813 oz. a year ago. Despite higher throughput, output in the quarter was adversely affected by harder ore and below-budget open-pit production and waste stripping. These problems are attributed to the mechanical failure of blast-hole drilling equipment and may affect 1999 production rates.
Operating costs in the 3-month period averaged US$208 per oz., bringing the 9-month figure to US$195 per oz. The company anticipates its costs will remain below US$200 per oz. for the year.
Meanwhile, underground drilling at the nearby advanced Taror project is complete. The project also falls under ZGC’s umbrella.
Several holes were drilled from a hangingwall exploration crosscut on the 1420-level to test four sections over a strike length of 200 metres. Results from drilling in one section are still pending.
Results were reported only for those intercepts with weighted averages exceeding 3 grams gold per tonne. Gold values varied between 3.6 and 13.42 grams over intervals ranging from 2 to 36 metres in hole length.
Highlights include:
o hole 20, which returned four separate intervals, the best of which was 36 metres (from 96-132 metres) averaging 6.48 grams;
o hole 6A, which also returned four separate intervals, including 29.5 metres (from 72 to 101.5 metres) averaging 13.42 grams;
o hole 12, which returned 33 metres (from 2 to 35 metres) averaging 7.02 grams; and
o hole 23, which returned three separate intervals, including 21 metres (from 84 to 105 metres) averaging 10.96 grams.
The results are being incorporated into a feasibility study, which is due for completion in the coming months. Nelson hopes the study will call for the transportation of material to the Jilau mill.
Resource modelling, metallurgical testing and geological interpretations are under way.
Regional exploration elsewhere in the country has been discontinued, owing to low metal prices. However, results are expected shortly from underground sampling at the Chore deposit, 145 km east of Jilau.
Based on previous Russian estimates, the Chore deposit hosts 10 million tonnes grading between 4 and 5 grams gold.
In other developments, negotiations with the government of Mail concerning the company’s acquisition of the Kalana mine from Ashanti Goldfields and Johannesburg Consolidated Investment are at an advanced stage. The company hopes to redevelop the Soviet-built operation to produce 23,000 oz. gold per year initially, eventually boosting that to as much as 100,000 oz. annually.
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