Having completed the acquisition of the Nalunaq gold mine in October 2009, the prospect has rewarded Angel Mining with its first gold pour, announced on the 2^nd of March.  Current production is derived from a gravity separation circuit with output delivered in dore bar form of 90% gold and 10% silver.

Nalunaq, having been a productive but problematic project for its previous owners, was acquired for the discounted cost of $1.5 million.  Angel Mining saw the potential to replace the export of ore for processing with an innovative in-mine processing plant and, having gained the necessary licences to commence production with a gravity separation plant, will now seek the additional licences required to operate a more efficient Carbon in Pulp (CIP) circuit.  The CiP circuit will increase recoveries from 50% to 90% and the company aims to produce at an annualised rate of 15,000 ounces of gold by the end of 2010, and then 25,000-30,000 ounces per annum thereafter. 

Once the CiP circuit is operational, tailings from the gravity plant will be reprocessed to recover the majority of the remaining gold.  The gravity plant is being fed from several sources, the largest of which is the fines / sweepings produced from blasting.  In addition, the previous owner left behind a number of high grade ore faces it had developed as well as a 10,000 tonne stockpile of ready to export ore, while material from current and ongoing development work will also add to production. 

Strategically, Angel Mining will use the cash flows from Nalunaq to fund the development of its Black Angel zinc and lead mine, which has recently seen the construction of the lower cable car terminal completed and has now commenced construction of the upper terminal.  Having negotiated an advantageous off take agreement for Black Angel’s concentrate in January 2009, Angel Mining now appears to have the financial capability as well as the route to market to fully justify its ongoing commitment to Black Angel’s redevelopment.  With its chequered history investors are right to be cautious about the formally named Angus & Ross but, having now demonstrated tangible progress in the form of gold production, we confirm our stance of speculative buy with conservative valuation of 11.8p.