The recently commissioned gold process plant has a capacity of 1.5 Mtpa and at forecast head grade of 1.7g/t gold will produce 73,000 ounces gold annually.
Another plus is that operating costs are within Millennium's previously announced estimates, and it was confirmation of this production capability and operating costs over the review period which has justified the company declaring Commercial Production.
Commercial Production marks the completion of commissioning and operational ramp‐up of the mine and processing plant.
Nullagine has a 1.33 million ounce gold resource and a 741,000 ounce Ore Reserve contained within 7 deposits on granted mining leases.
The largest of these deposits is Golden Eagle which is strategically located 10 kilometres south of the township of Nullagine, and contains close to two-thirds of the current resource inventory.
January brings mined and hauled record; within budget
Highlighting the increasing speed of activities at Nullagine, Millennium achieved a new monthly record for total volume mined and hauled at 212,000 BCM in January, which is well above budget.
Gold doré poured attributable to January 2013 amounted to 7,200 ounces, also a new record for gold output. Fine gold sales amounted to 6,726 ounces at an average spot price of $1592 per ounce.
Metallurgical recovery averaged 91.4% for the month and C1 cash operating costs were within guidance at $828/per ounce.
Expansion on the agenda
Millennium is also focused on increasing the throughput, with Expansion Studies on the present design throughput of 1.5 Mtpa to at least 1.7 Mtpa for the FY2013.
The company requires a modest increase in throughput from 189 tonnes per hour to around 200 tonnes per hour to achieve this.
Millennium said that the evaluation process for this production increase has two important components:
1. The project's viability of sustaining output at this higher level; and
2. Assessing the combination of throughput and head grade that will yield the highest economic margin - translating into making best use of our production assets.
This Future production, cost and cash flow guidance in respect of the 2013 financial year (ending 31 December 2013) will be given at the end of the current quarter.
Drilling continues at pace
Millennium is actively targeting an increase in Resources and Reserves, and has kicked off an expansive 56,000 metre drill program, which includes reverse circulation drilling at Golden Gate and Golden Eagle.
This drilling is specifically targeting strike and depth extensions, as well as a large number of geochemical anomalies - which are yet to be drill tested.
Up until the end of January, 47 holes had been completed for 3,282 metres, with the program to continue to supply news flow throughout coming months.
The achievement of Commercial Production from Nullagine is a 'feather in the cap' for Brian Rear, CEO of Millennium.
The current annual forecast production rate of 73,000 gold ounces has the potential to increase in the near-term, due to the mines capability of operating above its design throughput.
There is the potential for a larger increase in production following Expansion Studies on the present design throughput of 1.5 Mtpa to at least 1.7 Mtpa for the FY2013.
With fine gold sales for January of 6,726 ounces at an average spot price of $1592 per ounce, Millennium has generated around $10.7 million in gross revenue - while importantly the C1 cash operating costs were within guidance at $828/per ounce.
The aggressive drilling campaign also has the potential to be a price driving catalyst with the company targeting a substantial increase in Resources and Reserves.
Proactive Investors considers the recent pullback in the Millennium share price to $0.025 an opportunity to 're-load' at lower prices, as the company has now proved that the operation is robust, with the potential to ramp-up production in the near-term.
Proactive Investors has set a near-term price target of $0.03, which is 25% higher than the current price.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.