TORONTO (miningweekly.com) – TSX-listed Mandalay Resources is now processing ore at its Cerro Bayo operation in Chile, and expects to ship the first concentrate in early February, the company said on Monday.
Mandalay bought the shuttered gold/silver mine from Coeur d'Alene Mines in August last year, and began underground mining in September.
The company's shares jumped 14,3% on Monday, to C$0,48 apiece by 11:16 in Toronto.
The firm said it had mined and stockpiled 12 048 t of ore by December 31, containing average grades of 0,87 g/t gold and 282 g/t silver, for a total contained 336 oz of gold and 109 346 oz of silver.
Mandalay expects to sell between 1,78-million and 1,91-million ounces of silver this year and about 11 000 oz of gold.
The company is forecasting full production of about 3,5-million ounces of silver and between 20 000 oz/y and 30 000 oz/y of gold in both 2012 and 2013.
By 2012, production costs after by-product credits should be in the $3/oz to $4/oz range per ounce of silver.
"There have been no downside surprises as we have resumed mining and processing," CEO Brad Mills said on Monday.
“Our ore stockpile at the end of the year is significantly larger than planned, containing more than $3,5-million in metal value at today's metal prices.”
The bigger stockpile reflects faster-than-planned development, but also that the company found more ore than predicted by the resource model on which it based the restart plan, he said.
Cerro Bayo is Mandalay’s second operation, after the company bought and restarted the Costerfield gold/antimony mine late last year.