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Silver Lake Resources gold production cash costs just A$432 per ounce at Wombola

Silver Lake Resources (ASX: SLR) is set to commence gold production at the Wombola Dam open pit in September 2011, which forms part of the company's larger Mount Monger Operations.

What makes the production story so interesting is the cash costs of just A$432 per ounce at the starter pit, due to a favourable waste:ore strip ratio of 4.8:1.

The starter pit is predominately transitional/fresh (hard) rock to produce around 13,000 gold ounces over nine months at the low cash costs, extracting less than 30% of the total resource down to a depth of around 35 metres.

The project allows additional ore stock available for feed in readiness for the stage 1 upgrade of Lakewood Mill to 700,000 tpa in December 2011, which Silver Lake has confirmed is tracking to plan.

Les Davis, managing director, told Proactive Investors today that the Wombola Dam Project complements the Lakewood Mill expansion to 1 million tonnes per annum.

"As we move forward into H2 FY12 we will be producing more ounces of gold through the expanded mill capacity resulting in higher production over our fixed costs base.

"This will result in lower group cash costs across our Mount Monger Operations."

At completion of the Wombola starter pit the company will conduct further drilling below 30 metres within the completed starter pit shell, along with grade control and depth drilling within the conceptual big pit shell.

This drilling is expected to complete the mining study for stage 2.

As the drilling and mining study for stage 2 is being completed Silver Lake is expected, subject to a decision to mine, to commence production at the Wombola Pit.

Currently Silver Lake has a resource base of 3 million gold ounces in the Mount Monger goldfield and the Murchison, with the company strategy to develop large production centres with multiple mines at each centre.