Australia region

St Ives

Gold production decreased by 10 per cent from 98,700 ounces in the March quarter to 89,200 ounces in the June quarter due to lower ore mined and processed.

Total tonnes mined increased from 4.6 million tonnes in the March quarter to 5.9 million tonnes in the June quarter.

At the underground operations, ore mined decreased by 36 per cent from 423,000 tonnes in the March quarter to 272,000 tonnes in the June quarter mainly as a result of the Cave Rocks operation moving to care and maintenance (at the beginning of May). Cave Rocks produced 58,000 tonnes in the June quarter compared with 177,000 tonnes in the March quarter. In addition, tonnes from the Hamlet operation were impacted by a blockage in the paste reticulation system in the June quarter which delayed the paste fill of open voids. The average grade of ore mined from the underground operations increased from 4.31 grams per tonne to 4.84 grams per tonne in line with the mining schedule as well as due to less dilution and increased higher grade mix.

At the open pit operations, total ore tonnes mined increased from 201,000 tonnes in the March quarter to 395,000 tonnes in the June quarter. Grade mined decreased from 2.32 grams per tonne to 2.21 grams per tonne. The increased tonnes mined were from the Invincible pit which was primarily in a stripping phase during the March quarter. All 395,000 tonnes of ore in the June quarter was produced from the Invincible pit. This compared with 27,000 tonnes produced from Invincible in the March quarter and 174,000 tonnes of ore produced from the Redback pit which was completed in March. Steady state ore tonnes from Invincible pit at a rate of 450,000 tonnes per quarter are expected to be achieved by end of August 2015.

Operational waste tonnes mined increased from 501,000 tonnes in the March quarter to 696,000 tonnes in the June quarter. Capital waste tonnes mined increased from 3.5 million tonnes to 4.5 million tonnes as additional working areas in the Invincible pit were developed. The strip ratio decreased from 19.8 to 13.3.

Throughput at the Lefroy mill decreased from 1.14 million tonnes in the March quarter to 0.91 million tonnes in the June quarter. After the utilisation of all remaining Neptune stockpiles a campaign milling strategy was adopted during the June quarter to preserve the remaining low grade stocks, thereby retaining operational flexibility going forward. Yield increased from 2.68 grams per tonne to 3.04 grams per tonne in line with reduced processing of low grade stockpiles. Gold production from Lefroy mill decreased from 97,600 ounces in the March quarter to 87,800 ounces in the June quarter mainly due to the lower volumes processed and the utilisation of all remaining stockpiled Neptune open pit high grade ore. Lower grade Neptune ore continued to be utilised into the June quarter. All Neptune stocks were depleted as of the end of June. Residual leaching and irrigation of the existing heap leach pad continued and a further 1,400 ounces were produced in the June quarter compared with 1,100 ounces produced in the March quarter. Since cessation of stacking activities, a total of 22,400 ounces have been produced. This process will continue until pregnant solutions become uneconomic.

Net operating costs, including gold-in-process movements, decreased from A$87 million (US$68 million) in the March quarter to A$78 million (US$61 million) in the June quarter mainly due to restructuring after the Cave Rocks mine moved into care and maintenance.

Operating profit decreased from A$67 million (US$53 million) in the March quarter to A$59 million (US$46 million) in the June quarter due to lower gold sold, partially offset by lower net operating costs.

Capital expenditure increased from A$32 million (US$25 million) in the March quarter to A$45 million (US$35 million) in the June quarter due to additional pre-stripping at the Invincible pit together with associated infrastructure establishments. Increased exploration activity also contributed to additional capital expenditure. Exploration expenditure increased from A$7 million (US$6 million) in the March quarter to A$12 million (US$9 million) in the June quarter due to timing.

All-in sustaining costs and total all-in cost increased from A$1,304 per ounce (US$1,029 per ounce) in the March quarter to A$1,454 per ounce (US$1,136 per ounce) in the June quarter due to the lower gold sold and higher capital expenditure, partially offset by lower net operating costs.

Agnew/Lawlers

Gold production decreased by 10 per cent from 59,600 ounces in the March quarter to 53,800 ounces in the June quarter mainly due to lower grades mined as a consequence of challenging geotechnical conditions at Waroonga.

Ore mined from underground increased by 14 per cent from 290,000 tonnes in the March quarter to 332,000 tonnes in the June quarter due to increased ore development meters and improved stope production rates at both Waroonga and New Holland. Head grade mined decreased by 23 per cent from 6.85 grams per tonne to 5.29 grams per tonne. Ground conditions at the Kim ore body have necessitated rehabilitation and extra ground support. This resulted in slower rates of mining in certain higher grade areas with tonnages substituted from lower grade areas in the Waroonga ore body outside of Kim. However, very little effect is expected in terms of ounces forfeited, if any. Planned changes in mining mix have also affected the grade.

Tonnes processed increased marginally from 312,000 tonnes in the March quarter to 314,000 tonnes in the June quarter. The combined yield decreased from 5.94 grams per tonne to 5.33 grams per tonne mainly due to lower grades mined. The gap in the yield quarter on quarter is lower than the gap in the mining grade quarter on quarter due to higher grade stockpiles being processed in the June quarter and lower grade material being stockpiled.

Net operating costs, including gold-in-process movements, decreased from A$47 million (US$37 million) in the March quarter to A$46 million (US$36 million) in the June quarter due to a A$2 million (US$2 million) build-up of inventory in the June quarter compared with a A$1 million (US$1 million) drawdown in the March quarter.

Operating profit decreased from A$45 million (US$36 million) in the March quarter to A$37 million (US$29 million) in the June quarter due to lower gold sold, partially offset by lower net operating costs.

Capital expenditure increased from A$20 million (US$16 million) in the March quarter to A$23 million (US$18 million) in the June quarter. The increase in capital expenditure was due to increased exploration expenditure. The drive from the Kim decline to the high grade Fitzroy, Bengal and Hastings (“FBH”) ore bodies continued throughout the June quarter. The first ore from FBH is expected in October 2015. The methodology described above to best manage the ground conditions at Kim has pre-emptively been applied to the mining plan to be utilised at FBH. Commencement of mining at the relatively high grade FBH and greater volumes of ore from Kim is expected to result in higher grades mined in the second half of 2015.

All-in sustaining costs and total all-in cost increased from A$1,206 per ounce (US$951 per ounce) in the March quarter to A$1,357 per ounce (US$1,077 per ounce) in the June quarter mainly due to lower gold sold and higher capital expenditure.

Darlot

Gold production increased by 55 per cent from 11,200 ounces in the March quarter to 17,400 ounces in the June quarter due to higher volumes and grades mined.

Ore mined from underground increased from 86,000 tonnes to 108,200 tonnes mainly due to increased stope and production development tonnes. Head grade increased from 4.37 grams per tonne in the March quarter to 5.43 grams per tonne in the June quarter. The increase in grade was due to the removal of high risk marginal low grade stopes and an increase in higher grade development ore in Lords South Lower. Capital waste tonnes mined increased from 40,000 tonnes in the March quarter to 55,500 tonnes in the June quarter due to the development to Lords South Lower.

Tonnes processed increased from 86,000 tonnes in the March quarter to 128,300 tonnes in the June quarter mainly due to increased tonnes mined and 63,000 tonnes of toll treatment ore. The yield increased from 4.04 grams per tonne to 4.22 grams per tonne mainly due to higher grade ore mined, partially offset by lower grade material treated as part of the toll treatment arrangements. The tolling arrangements contributed 880 ounces to gold production for the June quarter.

Net operating costs, including gold-in-process movements, decreased from A$19 million (US$15 million) in the March quarter to A$17 million (US$13 million) in the June quarter. The reduction reflects a higher portion of mining costs being allocated to capital as the development at Lords South Lower accelerated as well as the continued rationalisation of costs across the mine.

Operating profit of A$9 million (US$7 million) in the June quarter compared with an operating loss of A$1 million (US$1 million) in the March quarter mainly due to higher gold sold and lower net operating costs.

Capital expenditure increased from A$5 million (US$4 million) to A$8 million (US$6 million) with increased capital development at Lords South Lower and increased exploration expenditure. The benefits of the higher grade Lords South Lower section are expected to be realised in the second half of 2015 with first stope ore to be mined in July.

All-in sustaining costs and total all-in cost decreased from A$2,226 per ounce (US$1,757 per ounce) in the March quarter to A$1,500 per ounce (US$1,164 per ounce) in the June quarter mainly due to higher gold sold.

After a difficult March quarter, Darlot was able to meet its goal in the June quarter of self-funding a meaningful exploration programme in order to extend the mine’s life and continue the search for the “game changer” which is targeted to return the mine to a 15 per cent free cash flow margin. With the high grade Lords South Lower moving into production, Darlot will seek to recoup the March quarter shortfall in the second half of 2015.

Granny Smith

Gold production increased by 4 per cent from 72,000 ounces in the March quarter to 74,600 ounces in the June quarter due to improved volumes and grades mined.

Ore mined from underground increased from 323,000 tonnes to 354,000 tonnes. Head grade mined increased from 6.30 grams per tonne in the March quarter to 7.21 grams per tonne in the June quarter with mining activity taking place, as anticipated, in higher grade areas of the ore-body. Ore tonnes mined increased as a result of efforts during the quarter to increase the number of stopes available, with additional resources being applied to ground control and services works.

Tonnes processed decreased by 2 per cent from 370,000 tonnes in the March quarter to 361,000 tonnes in the June quarter with less relatively higher grade stockpiled ore processed in the June quarter. The yield increased from 6.05 grams per tonne to 6.41 grams per tonne. The difference in head grade and yield reflects an increase in higher grade stockpiled ore at the end of the June quarter.

Net operating costs, including gold-in-process movements decreased from A$48 million (US$38 million) in the March quarter to A$46 million (US$36 million) in the June quarter, mainly due to a A$1 million (US$nil million) drawdown of inventory in the June quarter compared with a A$6 million (US$4 million) drawdown in the March quarter, partially offset by higher operating costs due to increased mining volumes.

Operating profit increased from A$64 million (US$50 million) in the March quarter to A$66 million (US$53 million) in the June quarter due to the higher gold sold and lower net operating costs.

Capital expenditure increased from A$20 million (US$16 million) in the March quarter to A$23 million (US$18 million) in the June quarter. The majority of the expenditure related to capital development and exploration.

All-in sustaining costs and total all-in cost decreased from A$1,027 per ounce (US$810 per ounce) in the March quarter to A$989 per ounce (US$770 per ounce) in the June quarter mainly due to higher gold sold and lower net operating costs, partially offset by higher capital expenditure.