Blackham Resources provides operations update and FY19 guidance
Wednesday, Jul 18, 2018
Blackham Resources Limited is pleased to present an operational update for the June 2018 half at its 6.5Moz Matilda-Wiluna Gold Operation ("the Operation"). Resolution of the mine sequencing issues experienced in the Dec'17 half have enabled record gold production for the Jun'18 half of 40,024oz @ AISC A$1,294/oz (Dec'17 half: 30,541oz @ AISC A$2,063/oz) with mill feed comprising mainly higher grade run of mine ore and being less dependent on low grade stockpiles. Significant improvements were achieved to mill throughput (+12%) from continued debottlenecking of the crushing, milling and leaching circuits.

Highlights

- Operations generate positive cash flows again in the June quarter

- Record six months of gold production to Jun'18 of 40,024 oz (Dec'17 half: 30,541oz), a 31% increase on last half

o 1,012kt milled for the half (Dec'17 half: 822kt), a 23% increase on last half achieved through successful de-bottlenecking of the process plant

o Mill feed grade improved to 1.47g/t (Dec'17 half: 1.26g/t) due to processing more high grade ore, and less dependence on low grade stockpiles

o All in sustaining costs per ounce ("AISC") for the half were A$1,294/oz (Dec'17 half: A$2,063/oz) resulting from a step change in economics being achieved during the half. Excluding the impact of sustaining capex, which mainly comprised a tailings dam lift, AISC for the half was A$1,141/oz.

- Jun'18 Qtr gold production of 19,393oz (Mar'18 Qtr: 20,631oz), in line with previous quarter

o Record throughput of 535kt milled for the quarter (Mar'18 Qtr: 477kt), a 12% increase on last quarter

o Mill feed grade of 1.44g/t consistent with prior quarter (Mar'18 Qtr: 1.51g/t)

o Process recoveries reduced to 78.6% (Mar'18 Qtr: 89.4%) due to the main ore source being the transitional and fresh ore from the now completed M4 pit, a one-off isolated issue which was the primary constraint to achieving higher production in the quarter and half year, as well as increasing AISC

o Process recoveries in the first half of July are back above 90% due to the main ore source being oxide ore from the M1 and M2 pits

o AISC for the quarter of A$1,509/oz (Mar'18 Qtr: A$1,092/oz)

o Stripping ratio for the quarter increased to 8.8 times (Mar'18 Qtr: 3.9 times) representing an investment in next quarter's production and a large contributor to the higher AISC in the Jun'18 quarter

- Average realised gold price of A$1,685/oz for the half, and A$1,696/oz for the Jun '18 quarter

- Current gold forward sales contracts of 26,389oz @ A$1,742/oz over the next 8 months

- Net debt at 30 June 2018 reduced to $8.4m (31 March 2018: $10.4m)

o Cash and bullion of $23.9 million and secured debt of $32.3 million

- Production guidance for FY19 is 77k-89koz @ an AISC of A$1,250-$1,450/oz

Process recoveries reduced to 78.6% in the quarter (Mar'18 Qtr: 89.4%) due to the main ore source being the lower transitional and fresh ore from the now completed M4 pit. Process recoveries in the first half of July are back above 90% due to the main ore source being oxide ore from the M1 and M2 pits.

The lower processing recovery for the June quarter (now resolved in July) reduced gold production causing AISC to be slightly higher than guidance. Abnormally high sustaining capital expenditure (being A$153/oz for the half) was mainly for a tailings dam lift.

Production, Cost and Capital Guidance for FY19

Production guidance for FY19 is 77k-89koz @ an AISC of A$1,250-$1,450/oz. FY19 AISC is expected to be higher than Life of Mine AISC, particularly in the first half, due to the investment required to strip new mining areas in the M1 and M2 pits to maintain a high mill throughput. The second quarter will incur mobilisation costs of moving to the Wiluna open pits which are anticipated to underpin the long term future of the Operation. There is some flexibility in the timing and quantum of non-sustaining capital expenditure in FY19, which is currently estimated to be $3.3m for the Sep'18 quarter, comprising pre-production costs, reserve definition drilling, expansion studies and discretionary exploration expenditure, all of which represent an investment in current and future years' gold production.

Blackham's Executive Chairman, Mr Milan Jerkovic, said:

"The June half's operational results demonstrate significantly stronger production and a step change in the Operation's economics that commenced in December 2017. Record production and significantly reduced costs underpinned stronger operational cash flows for the half. The Company looks forward to increasing production in FY2019 as the Operation transitions to the Wiluna open pits"

The June 2018 Quarterly report is expected to be released on or around 26 July 2018 and it will contain a more detailed analysis of the quarter's production and costs.

For more information, please visit: http://blackhamresources.com.au

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