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Cambridge Mineral Resources

  • BY: Andrew Hore |
  • POSTED: 21/11/2008 |

Cambridge Mineral Resources has started gold production at its Quintana Gold Mine in Colombia.

The mine should have a five year life and is expected to produce more than 15,000 ounces of gold and 6,000 ounces of silver each year.

CMR is selling the gold to a Colombian gold refiner and receives a price based on the London afternoon market price. Cash operating costs are expected to average $131/ounce over the life of the mine.

The net present value of the mine at a gold price of $600/ounce is $10.8m. Annual profits should be around $5m.

CMR has also completed a feasibility study on the Rasuhuilca silver gold project in Peru. The capital cost of the mine will be $3.1m. Total operating costs are expected to be around $8/ounce for the silver. The silver price is falling and getting nearer to that figure. Using second hand plant would help to reduce those costs.

CMR has a $15m finance facility for three mining projects in Colombia. Quintana is the first and it cost around $4.5m. Another $10m facility is available for two more mines.

Cash generation should build up over the next couple of years. CMR plans to use some of the cash it generates from its mines to pay dividends. That will not happen immediately but it is something for shareholders to look forward to.

One more mine should be up and running in Colombia before the end of 2009. The Rasuhuilca mine in Peru should be open at a similar.

CMR has non-core assets in Spain and Bulgaria. It is looking for a partner in Spain and already has one paying for all the exploration in Bulgaria.

At 1.625p a share, CMR is valued at £5.77m.

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