Catalpa Resources (ASX:CAH), Perth-based emerging gold producer recently released its December 2008 quarterly results, outlining significant progress the Company has achieved during the period to advance its Edna May Gold Project .
Managing Director, Bruce McFadzean cited the past quarter as a ‘milestone’ in the Company’s journey towards becoming Australia’s next gold producer.
“In the December quarter we had a successful rights issue to raise $3.5 million before costs, to finalise the Edna May Gold Project Feasibility Study and to fund our ongoing exploration programmes and operations.”
“The success of the rights issue against the backdrop of an extremely challenging financial environment reinforces the confidence in the Edna May Project and in the increasingly bullish outlook for gold.
“We finalised the Edna May Gold Project Feasibility Study during the quarter, which demonstrates a robust project cash flow with a mine life of 6.3 years with an average annual production rate of more than 100 000 oz of gold.”
“Notably, the Feasibility Study excludes any additional underground mining potential further supported from encouraging exploration results from our 2008 drill programme. These results increase our confidence that deeper Edna May Gneiss targets provide an increasingly positive outlook for potential underground mining in the future.”
“In anticipation of the funding, construction, and production phases ahead, Catalpa’s management team was considerably strengthened during recent months, with the addition of Erik Palmbachs as Chief Financial Officer in October 2008, and Stuart Pether, who joined us this month as General Manager Operations.”
“The project offers shareholders and investors a cash flow within twelve months combined with very attractive margins at today’s gold prices. Furthermore Catalpa believes there is significant project upside from planned updates to the Reserve from the adjacent Greenfinch deposit where drilling is scheduled to commence this week, and a review of existing surface stockpiles during 2009.”
“At today’s gold price, the project has very attractive average cash operating margin of more than $50M per annum, which will underpin Company growth over the near term.”
“The Edna May Project will be constructed in a market of downward capital cost pressures, and will be operated in a market of contained cost pressures.
“Our Reserve is 64% Proved category and contains over 130,000 metres of drilling of which almost half is diamond core. The Ore Reserve is metallurgically simple and geologically massive.
“We have commenced detailed discussions with banks and hope to finalise the funding process and move the project into construction before the end of the current financial year. We do not anticipate the funding task to be easy; however with sound project economics, a margin protection strategy and an experienced management team we understand that funding is achievable in the current environment,” Mr McFadzean said.