Lachlan Star's Komatsu Fleet To Drive Efficiencies At CMD Gold Mine

Dec. 11, 2012 10:10 PM ET
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Gold producer Lachlan Star (ASX: LSA) has started to receive the delivery of a 100 tonne Komatsu fleet, which importantly is expected to provide both cost savings and the ability to ramp up total mining movements at the wholly owned CMD gold mine in Chile.

The company is looking to reduce its reliance on contracting companies and has signed a purchase agreement with Komatsu Chile for the purchase of a mining fleet, comprising HD785 (91 tonne) trucks, WA900 loaders and ancillary equipment and the implementation of a maintenance and repair contract.

The delivery and assembly of the following is underway; 2 x HD785 trucks, 1 x D275 dozer,
2 x WA900 loaders, 1 x GD675 Grader; and 1 x WD 600 wheeled dozer. The remaining 5 x HD 785 trucks will be delivered prior to Xmas.

The Maintenance and Repair Contract with Komatsu has been executed and includes the provision of a major component exchange pool and an on site spare parts consignment stock.

In addition, Lachlan Star recently purchased a fleet of seven Mercedes Benz trucks and two Komatsu WA600 loaders to be used for the dynamic leach pad rehandle that has predominately been carried out by contractors. This equipment is now in operation at the mine and is expected to deliver costs savings of up to US$20 per ounce.

Komatsu fleet to drive efficiency

Once operational and sufficient operators have been certified to operate the equipment, the fleet will gradually be phased into mining at the Tres Perlas pit. In the interim, mining has continued using contractors with 30t trucks and has successfully mined 2Mt total movement/month for each of the past 3 months, a record since 2006.

The addition of the 100 tonne Komatsu fleet is expected to provide both cost savings and the ability to ramp up total mining movements.

Implementation of the continuous improvement program continues to yield results with the focus on blasting practices having seen the cost of blasting reduced materially during 2012.

During November, explosive consumption (powder factors) has been reduced to the lowest in 2012. Lachlan Starsaid that this has been achieved through better planning, improved blasting practices and working with the Company's explosive supplier to optimise blasting practices.

Analysis

The delivery of the fleet marks an increased level of control for Lachlan Star at the gold producing CMD Mine in Chile, as it reduces the reliance on contracting companies.

With increased control will come improved efficiency, which will help ramp up total mining movements - and therefore the potential to pour gold at an increased rate.

The potential of Lachlan Star has already been recognised by the broker community, with American based Stonecap Securities recently rating the company as an 'Outperform', with a price target of C$2.35 (around A$2.30) - which is almost double the last traded price of A$1.30.

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