Gold One now cashflow positive as gold production ramps up

JSE and ASX listed Gold One reported good progress at its Modder East gold mine near Johannesburg and potential of its exploration properties.

PERTH - 

South African gold miner, Gold One International (ASX, JSE: GDO) which was formed out of the merger of South Africa's Aflease and Australia's BMA Gold, says its flagship Modder East gold mine has now moved to a cashflow positive position with life-of-mine cash costs still expected to be below US$300 an ounce.  It is still making a loss as production builds - A$3.94 million in the first half of the current year, down from a pre-production loss of A$39.5 million a year earlier.  (Gold One reports in Australian dollars - US$1 = A$1.109).

However, Modder East would now become part of a much expanded project pipeline of exploration and mining projects in contrast to Gold One's position a year ago as a one mine developer.

Addressing the opening day today of the three day Paydirt 2010 Africa Downunder Conference, in Perth, Gold One International 's CEO, Neal Froneman, said the Company had achieved its objective of moving from developer to producer, and expects costs to continue to fall as production ramped up.

"We poured our first gold only 12 months ago and then went into commercial production five months later, achieving first tonne of gold by May this year," Froneman said.

"We believe Modder East is a high quality gold operation and we expect current annualised production of 72,000 ounces, a little below target, to grow to well in excess of 100,000 ounces," he said.

"We are unhedged, we are cash flow positive, our life-of-mine costs are low and we have a large resource base.

"Importantly, we have expanded our horizons beyond getting Modder East into production to have a number of exploration and development mining projects in Free State, Mozambique, Namibia and Gauteng in the pipeline with scoping, prefeasibility studies and drilling underway across this portfolio.

"That focus is helping Gold One deliver our milestones."

Modder East h is estimated to have a JORC compliant gold reserve of 1.36 million ounces at 5.5 g/t gold.

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