Gold concentrate production at Highland Pacific"s Kainantu Gold Mine was up 11% from the previous quarter to reach 5995 ounces. A total of 29,431 tonnes of ore was processed from April to June.

Under John Gooding's appointment as managing director, a number of initiatives have been implemented to improve production, including the appointment of a new management team at Kainantu.

A priority task of the new team is to undertake a thorough review of the gold resource and reserve position as well as the mine plan to establish a reliable schedule of gold production.

Work continued in the mining and metallurgical production areas to improve the performance of operations.

An enhanced training program for hand-held stope miners has been successful with the grades mined in the narrow shrink stopes improving. However, greater than expected dilution had an adverse effect on the grade of ore produced in the quarter.

The gold mineralization is associated with quartz sulphide veining which occupies large north-west trending shear zones. These structures are hosted by low grade quartz phyllites and andesites.

The proposed move to mechanized sub-level long hole methods will allow the ability to introduce engineering controls to stabilize the hanging wall of the ore body.

Mine ore production has been ramped up since May and is now averaging more than 3000 tonnes per week. It is anticipated that further increases will be achieved this quarter.

Development focus has continued on the incline ramp development and it is estimated that breakthrough will occur early in the fourth quarter which will then result in significant cost savings and operational improvements.