JOHANNESBURG (miningweekly.com) – Western Australian gold producer Ramelius Resources on Friday reported that its Wattle Dam gold mine was on target to proceed to full production by January 2010, after milling its first underground development ore this week.

“The underground development has progressed well and we are on track to enjoy the fruits of our labour through the extraction and milling of gold ore over the full first calendar year of underground mining,” said Ramelius chairperson Robert Kennedy.

At the end of November, Ramelius began milling the first parcel of underground ore from its flagship mine, and would shortly begin earning a cash flow from sales of the new ore, processed through its Burbanks mill, near Coolgardie.

Over the past 12 months, Ramelius has completed the cut back to the original openpit mine, paving the way for full-scale underground mining at Wattle Dam, where recent exploration has unearthed grades of up to 819 g/t of gold.

Kennedy noted that the initial openpit mine that started in March 2006, had produced some 34 500 oz of gold, which was two and a half times the original estimate.

“This year, I am pleased to report that the pit cut back at Wattle Dam has resulted in 158 038 t of ore being mined, which produced 16 972 oz of gold, or three times the quantity estimated to be extracted from this phase of the mine.”

Kennedy added that the openpit phase, along with thee additional gold produced from Wattle Dam to date, around 32 000 oz have been produced, which was equivalent to an extra ton of gold.

The mine plan for the underground mine at Wattle Dam was based on production of 68 700 oz of gold, although this target may well be exceeded.

“With the gold price currently above A$1 250/oz, any overcall will certainly boost the company’s bottom line during the year ahead.”