JOHANNESBURG (miningweekly.com) – TSX-listed Anaconda Mining has failed to achieve its desired gold production target in the first fiscal quarter of 2017, the company announced on Tuesday.

"There were several bright spots in a quarter where the company did not achieve its desired gold production level, thus generating lacklustre financial results,” said CEO Dustin Angelo.

In the three months to August 31, the company's operations were severely impacted on by low grade. It had also increased mining activities to place waste rock for the construction of the first phase of the second tailings storage facility.

However, the mining department exceeded its operating budget in the first fiscal quarter and expects to complete construction of the tailings facility in the second quarter of fiscal 2017.

The company projects a reduction in mining costs for the remainder of the fiscal year, driven by lower tonnes mined, as well as a reduced strip ratio.

Grade is expected to increase in the second half of the fiscal year based on the mine plan.

To offset the reduced grade currently being mined, Anaconda significantly increased throughput per operating day at its Pine Cove mill.

The mill averaged 1 220 t/d of operation in August, 90 t/d of operation more than the quarterly average.

Heading into the second quarter, the company experienced even better results in the mill, achieving 1 340 t/d of operation in September.

Meanwhile, in the period under review, Anaconda sold 2 919 oz of gold, resulting in $4.9-million of revenue at an average sales price of $1 685/oz.

Cash cost per ounce sold at the Point Rousse Project, in Newfoundland, Canada, for the period was $1 244.

The company generated positive earnings before interest, taxes, depreciation and amortisation and other noncash expenses of $1.2-million at the Point Rousse Project. Net loss for the three months ended August 31 was $379 565.

Angelo noted that the company had succeeded in raising over $2-million in flow-through equity financing for a 17 000 m drilling programme. It had also secured a $1.5-million credit facility with The Royal Bank of Canada to allow for greater financial flexibility.

“In the short term, we have hit a few bumps in the road, but we continue to build a strong foundation for the future,” he concluded.