THE WEST AUSTRALIAN
Tuesday, 26 February 2013 08:37
Reed Resources managing director Luke Tonkin has dismissed the "scuttlebutt" surrounding its Meekatharra gold operations, saying the company was hitting its targets and would be cash-flow positive by April.
Speaking at the official opening of the company's mine in Meekatharra yesterday, Mr Tonkin said the market was "bloody impatient" and needed to realise the ramp-up of any operation took time.
"We are basically spot on and there's nothing more this team (at Meekatharra) can do," Mr Tonkin said. "The whole market is so bloody impatient, so what we need to do is keep reaching our targets and leave the speculation to the speculators."
Reed took hold of the massive brownfields Meekatharra Gold operation - and its 3 million tonne-a-year processing plant - from Canadian company Mercator for $27 million in June 2011.
The company has spent about $30 million ramping up operations and poured its first gold bar last month.
However, it has come under criticism from analysts who claim Reed had bitten off more than it can chew at the historical mine site, with the 3mtpa plant at 60 per cent capacity and processing lower grade material.
Mr Tonkin said a gradual ramp-up was part of the long-term mine plan.
Reed has a life-of-mine cash cost aim of $1243/oz.
Mr Tonkin said one of the benefits of the operation, about 10km south of Meekatharra, was a hedge price of $1626 it negotiated with Credit Suisse for 110,000oz when the gold price was at its relative peak. The gold price was $US1586 yesterday.
The company has another 17 months of gold production at Meekatharra, in the hope of producing 134,000oz over its life.
Yet Mr Tonkin admitted Reed eventually needed exploration success to replace "higher cost ounces" with "lower cost ounces".
The reporter travelled to Meekatharra as a guest of Reed Resources.
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