Ramelius Resources (ASX:RMS) announced today mining was well underway at its Mt Magnet gold project in Western Australia and production remained on track to begin in January next year.
Mining began in early September, with the first blast of waste material occurring on September 23.
At the start of September, Ramelius said mineral resources at Mt Magnet were estimated to be 41.86 million tonnes at 2.2 grams per tonne of gold for 2.96 million ounces of gold.
Ore reserves were estimated to be 9.35Mt at 1.8gpt gold for 545,000oz of gold. The ore reserves were estimated from open pit optimisations using gold prices of between $A1150 and $1300 per ounce.
Refurbishment works on the treatment plant are ongoing and are due for completion in November 2011.
Ramelius said the cost of the refurbishment would increase from $A14 million to $15.5 million due to a decision to replace the existing cyanide facility, and additional costs of refurbishment works on items that were not accessible during the original engineering assessment.
The company purchased the Mt Magnet gold project in July 2010.
Meanwhile, Ramelius has lowered its production guidance for the September quarter for the Wattle Dam gold mine, west of Kambalda, due to a failure within the crushing circuit at the Burbanks mill, and milling of lower grade development and other ore as development of Block D continues.
Production for the quarter is now expected to deliver 16,000oz of gold. This compares to production of 25,529oz from 43,437t of ore milled during the previous June 2011 quarter.
Ramelius said although a hire crusher had been sourced, production would also be impacted in the December quarter as repairs were completed.
To date, drilling below Block D has not intersected any significant results, however more recent drill holes to the north and below Block D have intersected encouraging alteration, according to Ramelius.
The company currently holds the equivalent of $A90 million in cash and gold.
Ramelius Resources listed on the Australian Securities Exchange in March 2003 to explore gold and nickel projects in the Goldfields of Western Australia.
The company discovered the Wattle Dam Gold Mine in 2005 and began mining the deposit in March 2006. In 2007 the company purchased the Burbanks milling facility to treat the high-grade Wattle Dam ore.
Ramelius has produced in excess of 150,000oz of gold from Wattle Dam and is currently producing high-grade ore from 200 metres below surface.