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ANNOUNCEMENT
Charters Towers Update
10 February 2010: Brisbane, Australia - Citigold Corporation Limited (Citigold) (ASX:CTO,
FSE:CHP) is pleased to provide further details with regard to the planned expansion of mining
operations, including plans to developed three reefs simultaneously at the company"s City mines
area at Charters Towers
As outlined in the recent Quarterly Report, to take advantage of the strong gold prices and with
Warrior on a growth path the Company considers it appropriate to commence planning to re-activate
the Charters Towers "City" mining area.
The development of the City "super mine" operations are
expected to deliver commercial gold production as early as the end of 2012, with full production
targeted for the following year.
City Mines Expansion
The City mining area is already an
established mine site.
Citigold
undertook the initial exploration and
trial mining at the City mining area in
the 1990"s after acquiring the first part
of the Charters Towers goldfield.
Full
control of the goldfield was obtained in
2004.
The City reefs contain 4.7
million ounces of the overall 10 million
ounce resource (23 million tonnes at 14
grams per tonne gold), as outlined in the
illustration on the right.
Citigold"s Gold Production Plan for the
design and development work has been
undertaken with the aim of producing
200,000 ounces per annum from the
City mines.
The City includes the
major Sunburst, Brilliant and Day Dawn
reefs.
The initial planning for the reactivation of the City mines is mainly an engineering and desktop
process.
This initial planning stage is intended to be funded via equity.
The development of Warrior
into commercial gold production has provided valuable information on the Charters Towers eastwest
striking ore bodies with both City and Warrior being geologically the same.
Citigold invested
considerable time and resources to understand the Warrior reef as the information obtained and the
knowledge gained would be needed for the City reefs as well as Warrior.
The City development
plans can now be improved.
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The City was previously planned to be developed as three separate mines.
However, with the
knowledge from the successful development of Warrior, one super mine containing all three reefs
will be developed simultaneously.
This change in strategy means the development plans need to be
re-designed.
The development of the City operations is expected to take 24 months before commercial gold
production commences and an additional 12 months for full production to be achieved.
With the
funding being provided via non-equity structured funding.
Funding the Development of the City
The reactivation of the City mines as a major project was triggered in part by approaches from
Chinese and other interests wanting to establish a production presence in Australia.
Part of the
planning will be to assess the best funding approach for this 200,000 ounce super mine.
The mining
knowledge from Warrior can be applied efficiently and effectively to the City because the deposits
are geologically the same.
This will assist taking the City mining operation to full production in a
shorter time.
The above image illustrates the planned City mining area, in blue.
As can be seen the reef length is
over 4 kilometres providing a large mining area suitable for the targeted gold production.
Several parties have expressed interest in non-equity project development funding.
Once the revised
mine plan is completed and the financial model updated to reflect the revised mine plan the funding
proposals can be advanced.
The preferred funding structure at this stage is via joint venture.
This
should allow Citigold to focus on growing the gold deposit and expanding production even further.
Major Infrastructure Already Established
Citigold has previously invested about $20 million in developing the City mining area.
This included
the current infrastructure of an optimum mine site, high voltage electric power, water, roads,
buildings, a 1.6 kilometre decline access down to 238 metres vertical depth, two ventilation shafts
and other associated infrastructure.
The excavation of the City mining site and decline successfully
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validated many technical aspects of the project including
the mineralisation and the supportive strength of the
granite country rock.
The City area has granted mining
leases with permits to mine.
The image to the right is an illustration of the existing
surface infrastructure at the City mining area
Warrior Ramp up to Continue
Cash flow from the current gold mining operations
remains strong.
With gold production for the December quarter the highest since operations at
Warrior commenced and production forecast to increase in 2010 it is important that the development
of the City mining area does not distract from Warrior.
Currently it is planned that the City development will be undertaken by outside mining contractors.
The in-house underground mining team employed by Citigold at Warrior is focused on becoming the
most efficient reef vein miners.
Keeping costs low means tight ore drives and rapid extraction of ore
from the production stopes.
This focus on getting ore tonnes has been a management initiative by
the mine leadership team to ensure the current
operations run at maximum profitability.
The use of
outside expertise to carry out the capital development
in the City will ensure this focus, on maximum ore
tonnes and minimal planned dilution continues.
The
Warrior and City operations aim at a combined output
of 300,000 ounces per annum in due course.
These
two Charters Towers mining areas are nearby each
other and will feed the Company" s one central gold
extraction plant.
The Future
The fundamentals for Citigold are impressive.
It has a low cost focus, a new growth focused
management team and a strong gold price.
Also the mining to date has confirmed the assumptions
made in the 10 million ounce Inferred Mineral Resource.
For further information contact:
Mark Lynch Matthew Martin
Managing Director Company Secretary
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STRATEGIC BUSINESS SUMMARY
Citigold Corporation is a gold producer controlling Australia"s richest major goldfield at
Charters Towers in North Queensland.
The high-grade deposit contains a gold
resource of 10 million ozs (23 Mt @ 14 g/t) with exceptional growth potential.
Gold output
targets growing to 300,000 ozs per year with gold production cash costs under A$350 per oz.
(See www.citigold.com for full resources report)
Cautionary Note: This release may contain forward-looking statements that are based upon management"s expectations
and beliefs in regards to future events.
These statements are subjected to risk and uncertainties that might be out of the
control of Citigold Corporation Limited and may cause actual results to differ from the release.
Citigold Corporation
Limited takes no responsibility to make changes to these statements to reflect change of events or circumstances after the
release.
The following statements apply in respect of the information in this report that relates to Exploration Results, Mineral
Resources and Ore Reserves: The information is based on, and accurately reflects, information compiled by Mr
Christopher Alan John Towsey, who is a Corporate Member and Fellow of the Australasian Institute of Mining and
Metallurgy and the Australian Institute of Geoscientists.
Mr Towsey is a geologist and employed by CTO as Chief
Operating Officer.
He has the relevant experience in relation to the mineralisation being reported on to qualify as a
Competent Person as defined in the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Identified
Mineral Resources and Ore Reserves.
Mr Towsey has consented in writing to the inclusion in this report of the matters
based on the information in the form and context in which it appears.
