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Vatukoula Gold reports higher revenues in full year as Fiji mine ramps up production

Fiji-focused Vatukoula Gold Mines PLC (AIM: VGM) reported a rise in revenues to £18.8 million in the full-year to August 31 2009 from £3.8 million a year earlier while it made an inaugural gross profit of £1.4 million compared with a loss of £0.6 million previously.

The company ascribed the results to the increase in production and a higher average gold price received of US$881 per ounce as well as major advances in the group's ongoing production ramp-up at the Vatukoula gold mine with gold produced totalling 33,757 ounces in the year, up from 12,847 ounces.

Pretax loss widened to £9.38 million from £4.06 million, mainly due to substantially higher administrative expenses and depreciation/amortisation in the period.

Following the period-end, the group initiated a capital expenditure programme to acquire refurbished underground equipment, including an additional five underground dump trucks and six underground loaders, more reliable power generating capacity and spare pumping capacity. The capex programme has led to rising production and lower costs being achieved.

CEO David Paxton commented:"It is paramount that these results are taken in the context of the board's overall and continuing strategy to develop the mine as a profitable venture moving forward.  In order to achieve that goal the board has had to focus both its efforts and funds on a significant capital expenditure programme. We continue to believe that this mine can produce 100,000 ounces of gold per year and we believe that the expenditure on significant new machinery and mine development will prove to be a solid long term investment.”

"The new equipment and mine development programme is already paying off and we are pleased with the progress currently being made at the mine in Fiji.  We look forward to providing more details in our next quarterly production report," he added.

The company’s proven and probable mineral reserves currently stand at 1.9 Mt (million tonnes) of ore grading 10.9 g/t (grammes per tonne) of gold for 0.68 Moz (million ounces), based on a gold price of US$750/oz and projected operating costs of US$107 per tonne of ore, which could increase about 20% if the assumed price were raised to US$1,050/oz.

The underground combined measured and indicated resource is at 8.3 Mt (million tonnes) grading 10.5 g/t of gold for 2.8 Moz, while the inferred mineral resource amounts to 4.7 Mt grading 8.6 g/t for 1.3 Moz.

Tailings based combined measured and indicated mineral resource now stands at 5.2 Mt grading 1.5 g/t for 0.23 Moz of gold.

Disclosure: The author holds no positions in the company