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Wednesday, November 01, 2017 Derek Macpherson

Austral Reports Q3; Production likely to Increase in Q4


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Austral Gold Ltd. (TSXV:AGLD, ASX:AGD) reported Q3 2017 production and financial results from its operations in Chile and Argentina. Total production for the quarter was 10,482 Au oz and 549,571 Ag oz (17,712 AuEq). The 41% increase in Ag production compared to last quarter offset the 11% decrease in Au production, which resulted in a net increase in AuEq production of 5% QoQ. The significant increase in production at Casposo allowed for a net increase in production for the company, as Guanaco processed lower tonnes due to delays in the commissioning of the new plant (Figure 1). Production guidance for CY2017 has been lowered to 85k-90k AuEq oz from 95k-101k AuEq oz. However, the company announced that all sections of the new agitation leach plant are now running at or near design specifications, which is expected to increase production at Guanaco/Amancaya going forward. In our view, Austral is poised to re-rate towards similar scale peers, as it demonstrates its increased production potential in both Chile and Argentina.



New agitation leach plant reaches designed performance. Guanaco/Amancaya continued to experience lower quarterly production as the company experienced delays in the commissioning of its new plant. The company resorted to their contingency plan of feeding Guanaco ore to the heap leach pads previously used for Guanaco ore and sending Amancaya ore to the new agitation leach processing plant at an initial rate of 600 tpd. However, by the end of Q3 2017, the agitation plant reached design performance of 1,210 tpd. With all sections of the new plant running at or near design specifications, the company is expecting higher production at Guanaco/Amancaya in Q4 2017.

Casposo continues operational improvements.
During the quarter 4,396 Au oz and 505,514 Ag oz (100% basis) – 3,077 Au oz and 353,860 Ag oz (70% basis) – were produced from Casposo. Due to operational improvements, which resulted in a higher gold recovery and lower costs, and the processing of higher silver grades, AuEq production increased by 19% QoQ and 29% YoY. The company recently increased ownership of the project to 70% and still has the option to earn the remaining 30%. The company expects to produce 50,000 AuEq oz for CY2017 (100% basis) at a targeted AISC of $957/AuEq oz.


Derek Macpherson | VP Mining Analysis
Victoria Ellis Hayes | Associate
Alex Pitcher | Associate
 
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Austral Gold Ltd. - TSXV:AGLD, ASX:AGD - 1,2,7

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