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Golden Queen shares lower after Mojave update

Last updated: 12:25 06 Jun 2016 EDT, First published: 07:25 06 Jun 2016 EDT

BHP-big-mining-equipment
Did Golden Queen numbers cut the mustard?

Golden Queen Mining Co (TSE:GQM) shares were lower on Monday despite the company delivering a bullish update about its 50%-owned Soledad Mountain gold-silver project located south of Mojave, California.

The company said it was pleased with progress, which included May production running at approximately 1,260 oz of gold and 15,000 oz of silver, totaling approximately 2,370 oz of gold and 26,000 oz of silver since the inaugural pour.

Mining and processing activities are now operating 7 days per week, the company said.

Agglomerate quality continues to be excellent. Porosity and permeability of the heap-leach pad remain extremely high, while the High-Pressure Grinding Rolls (HPGR) performance is exceeding expectations, with 70% to 75% of the output passing one-quarter of an inch.

The Company anticipates achieving commercial production in the second half of 2016. In accordance with US GAAP, the Company expects to begin recognising revenues and expenses related to the sale of metals in the second quarter of 2016.

A total of 397K tons of ore has been mined to date during the second quarter with a strip ratio of 1:7 waste to ore. A total of 2,337K tons has now been mined since January 2016.

North West Pit

The mining of the North West Pit commenced in 2015 and the mine rock has been used to construct the heap leach pad, the inter-pit access roads and the East Pit access road. The average assayed gold grade was lower than projected by the initial block model in this section of the ore-body mostly due to comparatively limited drill data in the near-surface part of the deposit. The mine plan has been adjusted to access the known higher grade zones and the Company anticipates the ore grade will improve in the second half of 2016. Mining of the North West Pit will continue until the end of 2016.

Main Pit

Mining in the Main Pit, Phase 1 area commenced in early January of this year. The average assayed ore grade to date has been slightly lower than projected by the initial block model but there is an increase in the tons of ore that off-sets the lower grade in terms of mineable gold and silver per bench. Mining of the Main Pit will continue into 2017.

East Pit

The construction of the East Pit access road is advancing on schedule. The East Pit in-fill drilling program is anticipated to commence later this month. The C$960,000 drilling program is expected to confirm our current mineral reserve and resources located in the East Pit.  The additional infill drilling data will be used to optimize the mine planning for the next 5 years.

Processing Plant

The crushing-screening plant's daily average throughput during the month of May was 8,580 tons per operating day. The design throughput rate per hour is approximately 700 tons per hour. The plant has operated above that level for the past two months at 730 and 750 tons per hour for April and May respectively.  The focus now is on raising the run-time per day to improve the pad-loading results.  Thus far in the second quarter, there has been over a 40% improvement in average daily run-time compared to the first quarter. The HPGR is performing better than expected, with 70% to 75% of the output consistently passing one-quarter of an inch.

As of the end of May, a total of 737K tons at a grade of 0.01 oz per ton is currently leaching on the heap-leach pad from ore stacked since the first of the year. Agglomerate quality continues to be excellent and the porosity and permeability of the heap-leach pad remain extremely high.  The Company forecasts the 150-day recovery of the first lift to be approximately 70%.

A total of approximately 2,370 oz of gold and 26,000 oz of silver has been produced to date. The mining costs for the month of April were $1.63 per ton mined and site operating costs were C$11.40 per ton processed.

Golden Queen shares were down 1.8% at C$1.61. Earlier, this marked a session low of C$1.55. Wall Street stock tickers were higher on Monday.

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