Bendigo Mining's road back to significant gold production now looks more like a level surface

A new mine in Tasmania and less reliance on the historic Bendigo goldfield helped the Australian miner post a 78% increase in output for the September quarter

PERTH - 

It is almost three years since Bendigo Mining Ltd (ASX: BDG) went from planned production of more than 200,000 ounces per annum to having to halt mining and plant operations to start again.

The steady climb back to respectable gold production reached a positive milestone for Bendigo Mining when its September quarter report showed an increase in output by 78% to 23,389 ounces.

What helped the lift was the move away from a dependence on the historic Bendigo goldfield to the acquisition of a second gold mine - at Henty in Tasmania.

The introduction of the Henty mine had managing director Rod Hanson predicting planned production for 2009/10 would be between 80-90,000 oz.

When Bendigo Gold found its operations at Bendigo were providing an alarming under performance the operation halted production from the Sheepshead Reef and went back into exploration in the historic central workings where grades had been strong - under the heart of the city of Bendigo.

The slow build up of production from unmined reefs in that area was bolstered several months ago when the company purchased the Henty mine which had both unmined reserves and exploration potential.

The company said since taking over Henty it now had a strong cash balance of A$52 million (US$46.45 million).

"We are extremely pleased with the Henty acquisition as it has doubled the size of the company in terms of gold output and, most importantly, in future growth options," Hanson said.

"Operating cashflows from Henty are strong and we have already increased the mine life from six to 12 months, to June 2010, and I am confident that we will see extensions beyond that."

Exploration at Henty was showing positive results from an up-dip continuation of the Tyndall Zone. Success was also achieved at the Kangaroo Flat mine at Bendigo with  discovery of "significant extensions to the small but high-grade Dumble Reef.

Hanson said cash operating costs for the company in September were A$658/oz (US$587 /oz), with cash costs being slightly higher for Kangaroo Flat.

The production guidance for Henty for 2009/10 was doubled to 50,000 oz.

The Bendigo goldfield has been Australia's second largest goldfield, having produced some 22 million ounces of gold. The Henty mine has been in operation for 13 years and has produced in excess of 1 M oz. Bendigo Mining acquired Henty mine in July.

Drilling has defined the Dumble Reef at Bendigo to be 15 metres long, 5m wide, with a vertical extent of at least 160m. The company said tonnage potential is small but the high grade nature of the mineralisation -- with visible gold in several drill holes -- indicates high value ore.

In late August the company declared a profit of A$8.25 M (US$7.37 M) for 2008/09 and declared a maiden dividend of 0.5 cents a share.

Disclaimer

MINEWEB is an interactive publication, with rolling deadlines through each day, commencing in the Sydney morning,  and concluding, 24 hours later,  in the Vancouver evening.  If you believe your side of an issue deserves inclusion, but has failed to meet one of our deadlines, you are invited to notify the Editor in Chief in Johannesburg, and we will include you in our editing and expanding on our stories. Email him at alechogg@gmail.com

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