Citigold Corporation details expansion of mining operations at Charters Towers

Australian gold producer Citigold (ASX: CTO, FSE: CHP) has provided 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.

During the afternoon trade, shares in the company increased 3.5% to 8.8c.

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.

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)

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 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.

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.

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.

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.