By Jamie Freed
SINO GOLD aims to start construction at its third Chinese mine, Eastern Dragon, by the end of the year after reporting record quarterly gold production of 46,290 ounces.
Sino produced 150,928 ounces at an average cash cost of $US400 an ounce from its Jinfeng mine and 2617 ounces from its new White Mountain mine last year.
This year it expects to produce 210,000 to 230,000 ounces at a cash cost below $US400 an ounce.
Analysts were pleased with the production results, and Sino shares closed 14c higher, at $4.69, on a day when the rival goldminers Newcrest Mining and Lihir Gold closed lower.
Sino has given priority to its $US60 million ($90 million) high-grade Eastern Dragon project in northern China over the lower-grade $US65 million Beyinhar project it acquired through a scrip acquisition of Golden China in 2007.
Since the acquisition, Sino has found Beyinhar does not contain a large deposit of higher-grade sulphide gold in addition to the existing oxide ore.
"When we looked at it, there were some interesting [sulphide] intersections," Sino's chief executive, Jake Klein, told the Herald. "But it appears those higher grade areas don't extend a lot deeper."
Yesterday Sino said it would take $US90 million of write-downs next month, mostly related to goodwill associated with the $US135 million Golden China acquisition.
Beyinhar could produce gold at a cash cost of $US450 an ounce, compared with costs of $US100 an ounce at Eastern Dragon.
Mr Klein said the write-downs would increase Beyinhar's ability to report an accounting profit. During the quarter Sino sold the small Nibao project it also acquired with Golden China to a local company for $US10 million.
Sino hopes Chinese authorities will permit it to start construction on an initial open pit at Eastern Dragon this year. Otherwise it cannot start construction until April next year because of the the harsh winter in the region.
Sino has bought an initial 25 per cent interest in a large exploration licence surrounding the deposit, with a pre-emptive right over a further 26 per cent interest.