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Cleveland Mining Group Completing Shift To Owner-Operator Model For Premier Gold Mine

Cleveland Mining Group's (ASX: CDG) Premier Gold Mine in Brazil is nearing completion of its transformation to an owner-operator business model with the jaw crusher and hammer mill installed and undergoing commissioning,

Fit out of the new In-Line Leach Reactor (ILR) from Australian supplier Gekko Systems is in its final stages with shipping set for 12 December 2013.

The move to an owner operator model with the installation of an integrated front end crushing and milling circuit to replace work previously done by contractors provides the company with much greater operational control and flexibility as well as cost savings.

Plant

The Plant is now fully installed and commissioning is advancing with some 6,800 tonnes of ROM material expected to be processed over the next few weeks.

The commissioning program will optimize the grind size of the material going through the front end circuit into the ball mill thereby increasing the gold recovery rate through the gravity circuit.

To date a recovery rate of around 60% has been achieved but Cleveland is targeting an increase to 75% once the plant is optimized and the new In-Line Leach Reactor ("ILR") unit is installed and commissioned through early 2014.

Electrical fit of the ILR is nearing completion and the unit will be packed into a container for shipping to Brazil on 12 December 2013.

Installation of the modular ILR unit is relatively simple and commissioning is targeted for late January / early February 2014.

The ILR-2000BA had produce better than 99% gold recoveries during the first round of optimisation work with optimal leach residency times of about six hours confirming its high efficacy in treating Premier material with relatively low cyanide consumption, which translates to low operating costs.

Premier Joint Venture Project

Cleveland had recently revised mine plans for the Metago and Pit 3 gold open pits at its Premier Joint Venture Project that provide further confidence towards achieving stable operations and set a medium-term target of 7,000 gold ounces per quarter from the Metago pit.

Under the plan, the two pits would produce about 19,000 ounces of gold over 20 months through processing of 30,000 tonnes of ore per month, generating an estimated margin of A$12.6 million. This will provide healthy debt servicing cash flow and also finance resource expansion.

While the company's medium-term target of 7,000 gold ounces per quarter will take 15,000tpm from the Metago pit and draw the remaining 15,000tpm from other higher grade sources, AMC's 30,000 tpm Upgraded Case provides confidence that Metago alone can provide 30,000 tpm until the other sources can come online to produce the targeted gold output.

The company also updated its Resource to 950,000 tonnes at 1.52g/t gold, or 46,400 ounces of gold comprising 18,900 ounces at 2.14 g/t of Indicated Resource and 27,500 ounces at 1.29 g/t of Inferred Resource.

Infill and exploration drilling on the down-dip and lateral extension of the mineralization will be conducted during the first stage mining operation, aimed at expanding the open cut mining area resource through the continued conversion of Inferred to Indicated resources, plus the inclusion of new resource tonnages.

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