The Laneway Resources Ltd (ASX: LNY) share closed up 14% today. This comes following the company's announcement on the completion of its first blast at the high grade Sherwood deposit at its 100% owned Agate Creek gold mine in North Queensland.
The emerging miner, with a market cap of $30 million, is no stranger to wild share price swings. Despite today's 14.3% gains, the share price is down 20% year-to-date. Over that same time the All Ordinaries Index (ASX: XAO) is down 6%.
What does Laneway Resources do?
Laneway Resources is an emerging Australian resource development and mining company. Most of its projects are gold-focused in Queensland and New Zealand. The company also has a coking coal resource project in New South Wales.
Why did the Laneway Resources share price soar?
Laneway revealed that the first blast, completed yesterday at Agate Creek, exposed the first ore as mining starts. It expects approximately 9,000 ounces of gold will be mined in 2 stages the Sherwood Open Pit in the current campaign.
The company plans to mine 43,000 tonnes @ 6.5g/t from Sherwood and that the initial 18,000 will be processed this quarter at the Lorena Gold Mine CIL processing plant. That will occur at a fixed price over 3 weeks starting around mid-November. It forecasts gold recoveries will be approximately 90%.
Laneway expects to stockpile the remaining 25,000 tonnes for transporting and processing after the wet season. It also expects to see significant positive near-term cash flow and to receive the majority of the payment for the gold it produces in the first stage before the end of the year.
Commenting on the results, Laneway chair Stephen Bizzell said:
Commencement of mining activities at Sherwood on time is a great outcome for Laneway shareholders and we will be processing ore very soon through Lorena's mill.
This means that significant revenue will be flowing to the company. The processing deal we have struck with Lorena enables payment by year end for the majority of the gold produced during this campaign.
This sets the company up well for a busy 2021 as we focus in parallel on the planning, approvals and development of the larger volume of high grade ore encompassed by the larger Whittle pit shell and then turn our attention to options for onsite processing of the almost half a million ounces identified at Agate Creek.
