SLR 3.30% $1.57 silver lake resources limited

News: Silver Lake Resources targets 100,000oz in

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    Lelde Smits: Hello, I’m Lelde Smits for the Finance News Network. Joining me today from gold producer and explorer Silver Silver Lake Resources Limited (ASX:SLR) is Managing Director, Les Davis.

    Les welcome back to FNN. Now last time we spoke, you mentioned a gold production target of 70,000 ounces from your Daisy Milano mine in the Mt. Monger gold fields. Are you on track?

    Les Davis: Yes we did achieve that. In FY11 we actually mined 72,000 ounces from the Daisy Milano deposit and we also managed to mine another 8,000 ounces from the Costello open-pit. So everything we set out to achieve since we spoke last time has come to fruition, which is nice.

    Lelde Smits: Now I see you recently completed a $5 million ventilation stack at Mt. Monger. What does this mean for the project and for production?

    Les Davis: Yeah prior to completing the ventilation shaft, we are what we call in engineering terms, mining constraint. So there’s a limit to the amount of primary ventilation going into the mine, which then negated the amount of people and equipment we could put down there. Now that that’s been completed on time and on budget, we can now put more people and more equipment underground to expand the production to 200,000 ounces per annum by 2014, as planned.

    Lelde Smits: Great development. Now you’ve also been targeting an expansion of your resource at Mt. Monger with success in Haoma and Daisy East, and have now added Wombola Dam 5 kilometres northwest of Daisy Milano. What is the size of the Wombola Dam deposit?

    Les Davis: Yeah Wombola’s got around 60,000 ounces in resource. We commenced production there around two weeks ago, so it’s going to be about a three-year project. So since we floated the Company in November 2007, we have done two small satellite pits. This is a long-life project so it certainly compliments what we’re doing over the time.

    Lelde Smits: And what is the new size of the resource at Mt. Monger?

    Les Davis: We currently have 1.5 million ounces in the resource base at a very impressive grade of 8.7 grams per tonne.

    Lelde Smits: Okay so with the expanded resource, how much more is left to be found?

    Les Davis: We’re quite confident that over the next sort of four to five years we’ll add another 2-3 million ounces to the resource base at Mt. Monger. So we think there’s at least 4.5-5 million ounces of gold in that deposit, but it doesn’t end there. We’re certainly committed to exploration. We’re currently spending around $2 million per month and we will continue to do that for the foreseeable future.

    Lelde Smits: Thanks Les, now to your other key mining area the Murchison. You acquired a 1.2 million tonne per annum mill for processing, with a decision to mine due later this year. What is the combined size of the resource and what is the decision hinging on?

    Les Davis: We currently have 1.7 million ounces in the resource base and we’re just finalising the detailed designs for the 14 open-pits and 4 underground mines. We are currently doing the extensional drilling at the underground deposit, so it’s not really hinging on a lot. It’s you know, getting very close to December and I’m confident that the Board will give it the green light at December’s Board meeting.

    Lelde Smits: Great. So assuming the go-ahead, when will production begin and what are you targeting for annual production?

    Les Davis: We think we’ll commit and we’ll start construction up there in January 2012, so it’ll take till the end of next year to get it into production. So it’s normally about a twelve month construction time to relocate, reconstruct and recommission the mill and we should have the first gold bar for our Christmas present next year, which would be nice. And then we’ll ramp it up to 100,000 ounces per annum in the following year. So it ramps up very quickly and the reason for that is we have a multitude of all sources to pick from.

    Lelde Smits: Still in the Murchison, you recently announced intersections of copper sulphides at your Hollandaire project. What was the average grade and depth?

    Les Davis: We’re still waiting for the analytical assays, but we use what we call a handheld XRF and that gives you a range of copper values. So the massive ore that we’ve intersected on the lower end of the range was around 6% copper and on the upper end of the range, was around 30% copper. So we’ll have the industry standard analytical assays back from mineral type and mineral grade, within three to six weeks.

    But what it does for the Murchison operation if it’s economic, is that we can have a dual processing/revenue stream up there and that would really underpin and underwrite the Murchison for years to come. So we’re certainly very excited with the Hollandaire project at the moment, but it is early and we’ve only got six holes into it, but it’s certainly a good place to start.

    Lelde Smits: So does this mean a copper project is a possibility in the next few years?

    Les Davis: Absolutely and the beauty of the project up there is that it’s only incremental capital, so we’re planning to spend around $65 million to bring the Murchison into production. But for an extra $20 million worth of capital which is only incremental, we could have a dual revenue stream. So we are in a very enviable situation up there.

    Lelde Smits: Now to corporate matters, you recently issued an announcement in response to a takeover bid and merger speculation. With your share price at near a 52 week high, are acquisitions a consideration or do you have enough on your plate already?

    Les Davis: Well we certainly have enough on our plate. However, as directors of the Company we always look where we can get a valuating transition. So if there’s a one plus one equals three transaction out there, we’ll certainly look at that and that’s our job on behalf of all shareholders. But at the moment our organic growth profile outweighs anything we could possibly think about doing, because we own it all.

    However, if there is certainly something that you know adds value to the bottom line and for the right reasons, we would consider that. But at the moment there’s sort of nothing progressing.

    Lelde Smits: Finally Les, what’s the goal for the next twelve months?

    Les Davis: It’s quite simple, we want to produce and sell 100,000 ounces of gold this financial year. We would need to de-bottleneck our mill at Mt. Monger which is in progress and on track. Commit to the Murchison and keep drilling, you know drilling has been a success story for Silver Lake. We’ve added 1 million ounces to the resource base for two consecutive years, throw in the copper, so that’s why we’re quite happy to keep exploring. So watch out for the news flow, particularly on the exploration front.

    Lelde Smits: Les Davis, thanks for the update and all the best for the year ahead.

    Les Davis: Thank you very much.


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