Santa Fe Gold Corporation (OTCBB: SFEG) has announced it has entered into a contract to sell approximately 240 tons of its anticipated 2011 production of high-value precious metals concentrate to Aurubis AG, Europe's largest copper and precious metals smelter.
At recent gold and silver prices, the contract is valued at approximately $9.0 million. The sales agreement was reached following a successful smelting trial of an initial 20 tons of concentrate shipped to Aurubus AG in October 2010. The company's Lordsburg flotation mill is in production and producing gold and silver concentrate from its Summit mine located in southwest New Mexico.
“In addition, we expect sales of siliceous flux material to two Arizona smelters to continue in 2011. A sales agreement with one of these smelters is imminent. Sales of siliceous flux material involve direct shipment of ore with minimal processing required.”
"We are pleased to have reached a very favourable agreement with Aurubis AG for sales of concentrate", said Pierce Carson, President and Chief Executive Officer. "We expect shortly to ship 40 tons of concentrate from stockpiles, which then will be followed by on-going regular shipments of concentrate produced from the Summit mine.
"The contract with Aurubis AG covering a portion of our anticipated production fits with our strategy of establishing sales of both concentrate and siliceous flux. This strategy will enable us to develop multiple customer outlets and multiple revenue streams. We also have agreed basic terms with an Asian smelter for sales of concentrate and anticipate finalizing a sales agreement early next year.
"In addition, we expect sales of siliceous flux material to two Arizona smelters to continue in 2011. A sales agreement with one of these smelters is imminent. Sales of siliceous flux material involve direct shipment of ore with minimal processing required."
The Summit mine is expected to reach full, steady production during 2011 from ore averaging 0.143 ounces per ton gold and 10.78 ounces per ton silver (0.35 ounces per ton gold equivalent). Revenues are expected to increase significantly over the course of 2011 reflecting increases in both tonnage and grades. Annual revenues at full production are estimated as approximate $40 million at recent gold and silver prices. Operating costs are projected to be $340 per ounce of gold equivalent produced.
Source: Santa Fe Gold Corporation