‘Outstanding’ gold production drives Silver Lake’s A$20m cash flow boost

Silver Lake Resources (ASX: SLR) achieved “outstanding” gold production from its Mount Monger operations in Western Australia during the March quarter, which resulted in a A$20.6 million boost to cash flow for the period.

The A$20.6 million increase to cash flow, compared to the previous quarter, was despite a A$8 million investment in exploration and capital development at the Mount Monger project during the March period.

Driving the cash flow increase was a production record for Mount Monger of 309,000t grading 4.95 grams per tonne gold for 49,000oz gold.

Production at Mount Monger was up 21% on the December quarter last year and 31% higher than the same period in 2017.

“Record March quarter production and strong cash generation from Mount Monger was underpinned by higher mined grades from both underground and open pit ore sources and is a direct result of our investment in the field,” Silver Lake managing director Luke Tonkin said.

The record production has lifted the company’s sales guidance to between 145,000oz gold and 150,000oz gold for the 2017-2018 financial year.

“Silver Lake remains favourably positioned to end financial year 2018 strongly and is exceptionally well-capitalised to pursue value creating opportunities for our shareholders,” Mr Tonkin noted.

High-grade gold hits

In addition to the record production and substantial cash flow increase, the March quarter also brought a lode discovery from diamond drilling at Mount Monger.

Drilling unearthed the Easter Hollows lode with one drill hole returning several intervals including 1.92m grading 25g/t gold, 0.2m grading 61g/t gold, 0.4m grading 13g/t gold and 1.76m grading 22.9g/t gold.

Other exploration across the company’s assets revealed gold hits up to 145g/t gold.

Five diamond drill holes at the company’s Daisy North target returned visible gold. Notable intersections were 2m grading 29.2g/t gold and 0.42m grading 51.2g/t gold.

Additionally, resource definition drilling at the Daisy Mine which was commissioned more than 10 years ago found mineralisation continued below current mining levels with intersections revealing 1.20m grading 145g/t gold, 0.67m grading 120g/t gold and 1.76m grading 22.9g/t gold.

Silver Lake has been a gold producer since it acquired the Daisy Complex in November 2007 and began production a month later.

Part of the Mount Monger operation, Silver Lake has mined Daisy as well as other deposits in the region including Christmas Flat, Wombola and Wombola Dam.

Ore has been trucked to the 1.2mtpa Randalls gold processing facility, which is 15km from the Daisy Complex and about 65km from Kalgoorlie.