Silver Lake Resources moves step closer to 200,000 ozs per annum gold production

Silver Lake Resources (ASX: SLR) has successfully completed the 520 metre ventilation shaft at Mount Monger, removing a constraint on its underground operations, moving a step closer towards production target of 200,000 ounces per annum by 2014.

The other requirement for stepping up production to meet this target is the upgrade and debottlenecking of the Lakewood Gold Processing Facility to 1 million tonnes per annum by September 2012 Quarter. This project is underway and on target.

The Mount Monger operation contains the Daisy Milano and Daisy East underground mines, along with the Costello open pit, located 50 kilometres from Kalgoorlie in Western Australia.

Production at Mount Monger is currently being sourced from three independent mines: Daisy Milano, Daisy East and initial ore development at Rosemary.

The company's Three Daisy Milano strategy is built around having three independent mines accessed from existing infrastructure and each producing approximately 60,000 ounces per annum by 2014.

Les Davis, Silver Lake’s managing director, said “we are currently mill constrained and our focus is now on completing the Lakewood Gold Processing Facility expansion to 700,000 tonnes per annum by December 2011 and up to 1 million tonnes per annum by September 2012 quarter.”

A first stage commitment has been made to expand the Lakewood Gold Processing Facility at a cost  of A$7.0 to A$8.0 million.

Documentation for the approvals process has been submitted to the regulatory authorities, engineering scope is nearing completion, and refurbishment of girth gear & electric motor has commenced.

Also, removal and relocation of a 1.6 megawatt mill from the company's wholly owned  milling facility located 30 km north of Leonora is in progress.

In addition, the company has intersected more near surface high grade from Resource  definition drilling at Wombola Dam as part of ongoing exploration at its  Mount Monger Operations.

Silver Lake would be encouraged by the numerous high grade, near surface intercepts including the following results that assay over half an ounce of gold per tonne:

- 1.0 metre at 79.5 grams per tonne (g/t) gold from 10 metres;
- 2.0 metres at 76.5 g/t gold from 22 metres;
- 2.0 metres at 49.0 g/t gold from 6 metres; and
- 2.0 metres at 41.9 g/t au from 13 metres.

Resource definition drilling down to 30 metres has been completed and a decision to mine is expected in the September 2011 quarter.

Silver Lake is targeting to increase production from the Mount Monger Operations to 200,000 ounces per annum by 2014 via mining from multiple underground and open pit ore sources.

Silver Lake’s Mount Monger Operations have a current JORC resource of 4.73 million tonnes at 8.7 g/t for 1.33 million ounces of gold.

The Wombola Dam deposit is located 5 kilometres north west of the Daisy Milano mine and has a current JORC gold resource of 557,200 tonnes at 3.0 g/t for 53,500 ounces.

Diamond drilling is in progress at Haoma and multiple mineralised structures west of Daisy Deeps. Several drill holes have been submitted for assaying with results due within two weeks.

Furthermore, the historic mining areas at Daisy Milano above the 12 level covering 320 vertical metres have been inaccessible due to the primary ventilation system exhausting through these areas.

Now that the ventilation shaft has been completed, plans are in place to re-enter these areas.

Previous production records and accounts of previous operators indicate there is potential for additional near term production sources and resource extensions from these areas.

Comment

Silver Lake, under Les Davis has continued to "tick all boxes" over the past 2-3 years.  Recent pullback in market valuation with the market malaise provides an opportunity for investors to re-load on Silver Lake and benefit from its growing production profile.   Continuing consolidation within the gold sector could see investors benefitting as investors re-rate companies like Silver Lake.