Integra Mining poised for $1000 per ounce cash margins on Randalls Gold Project plant upgrade

Integra Mining (ASX: IGR) is set to produce 100,000 ounces per annum at cash margins of more than $1000 per ounce after upgrading the Randalls Gold Project processing facility, capitalising on soaring gold prices of around US$1747 an ounce.

The upgrade will boost processing by 25% to 1 million tonnes per year, and has been achieved ahead of schedule and below its estimated cost subject to the receipt of final claims.

There is a forecast cash cost of production for financial year 2012 of $550 per ounce and a recent ore Reserve upgrade underpins a minimum 6 year mine life from open pit sources only, with no underground production potential included.

Underground trial mining is set to commence in the December quarter and metallurgical recoveries are expected to improve above the forecast 93% as a result of process refinements.

There is also 1.4 years of stockpiled medium-grade ore with mining cost paid.

The upgrade involved the installation of a second ball mill as a re-grind mill, tripling the size of the gravity gold circuit, an additional leach tank, hollow shaft twin-blade agitators with larger drive motors, increased storage facilities for reagents, automated reagent dosing and on-site oxygen generation.

Importantly, the upgrade will enhance both the efficiency and the flexibility of the process facility to treat gold bearing ores of different metallurgical characteristics from various gold deposits throughout the region. Increased gold recoveries are expected.

Chris Cairns and his team at Integra Mining have an enviable record of achievements.

Impressively, the process facility upgrade comes after less than a year of production, which commenced 24 September 2010, and less than a month after Integra announced a 94% increase in Ore Reserves with 480,000 ounces of Ore Reserves at the Randalls Gold Project.

Integra has a number of additional assets being prepared for conversion from Mineral Resources to Ore Reserves and expects to commence trial underground mining in the December Quarter at the high-grade Cock-Eyed Bob gold deposit.

If successful, underground mining will continue to the next level at Cock-eyed Bob and underground development at the Santa gold deposit will commence.

Upon completion of open pit mining operations at the Maxwells gold deposit, underground development would commence from the base of the open pit.

Subject to successful completion of the trial mining exercise, the objective is to progressively develop underground operations at the Cock-eyed Bob, Santa and Maxwells gold deposits to the extent that 50% of the process facility feed is provided by underground sources at an expected grade of 5-6g/t gold.

This will be blended with open pit production ore and stockpiled ore to maintain a 3-4g/t head grade presented to the process facility.

The life of the remaining open pit Ore Reserves will effectively be doubled by supplementing the process facility with 50% of feed from underground sources, enabling the company to target a 10  year mine life at the Randalls Gold Project.

A further increase to 120,000 ounces per year of steady state production, before 140,000 ounces per year is expected when high-grade underground production is established to complement the open pits.

Exploration

Integra has approved a $23 million budget for exploration and Mineral Resources to ore Reserves conversion, with additional discretionary expenditure as needed upon success.

Integra is focussed on five main areas for discovery: the recent Queen LaPage JV with Rubicon Resources; the Majestic region outside the discovery zone; the Mt Monger area, the Salt Creek region outside the known deposit; and the ‘SIRO’ target zone in the Aldiss Project and the Eraynia JV with Image Resources (ASX: IMA).