ASA Resources reports strong Q1 gold, diamond sales

JOHANNESBURG (miningweekly.com) – Multicommodity miner ASA Resources recorded a strong quarter to June 30, with gold sales up 2% quarter-on-quarter to 14 463 oz and diamond sales up 74% quarter-on-quarter to 30 888 ct.

The Aim-listed company attributed the growth in gold sales to higher head grade at its Freda Rebecca operation, in Zimbabwe, which increased by 9% to 1.96 g/t, from the 1.8 g/t reported in the fourth quarter of the 2016 financial year, despite its milling capacity being out of sync with its mining capacity.

The average realised gold price also increased by 5% to $1 275/oz, while cash costs fell 23% to $933/oz and all-in sustaining costs fell by 7% to $1 153/oz.

Meanwhile, the average realised fine diamonds price was up by 155% for the first quarter, at $55.90/ct, compared with $21.95/ct in the fourth quarter of the prior year.

Throughput of Marsfontein fine residue tailings from ASA’s Klipspringer mine, in South Africa, increased by 68% from 31 251 t to 52 403 t.

However, these gains were offset by a 31% decrease in nickel production from ASA’s Trojan mine, in Zimbabwe, to 1 555 t, owing to a 23% decrease in average head grade and a 4% decrease in recoveries.

ASA executive chairperson Yat Hoi Ning commented that nickel had remained stubbornly close to its five-year low of around $8 800/t for most of the first quarter, but, since July, had outperformed most base commodities. “It's now not surprising to see solid support for nickel well above $10 000/t.

“Against a very low nickel price, the Trojan mine achieved an exceptional result in its previous quarter, when both C3 costs and nickel sales performed much better than their long-term historical average. Any comparison, therefore, between the last quarter and this quarter is going to appear disappointing.

“I should add that, while this quarter was below expectations, when compared to the long-term average, the decreases in sales, recovery and grades are a lot less dramatic. The main reason for Trojan's underperformance was reduced access to higher orezones,” he said.

Meanwhile, Ning highlighted that the company would now further strengthen its focus on the 2.97-million-ounce Zani-Kodo gold project, in the north-east of the Democratic Republic of Congo.

“The potential to build a major gold resource is significant. In time, the group intends to fully exploit its 1 605 km² of mining rights. If the gold price remains at current levels, this resource may come to define the group's true long-term future,” he added.