Castle Gold Corporation

Castle Gold Corporation

July 21, 2009 11:13 ET

Castle Gold Announces Operation of Remaining New Equipment Fleet at El Castillo Mine Enabling Targeted Expanded Production

TORONTO, ONTARIO--(Marketwire - July 21, 2009) - CASTLE GOLD CORPORATION (Castle Gold, the Company) (TSX VENTURE:CSG) is pleased to announce that following the signing of a new contract with CAMSA, the mining contractor at the Company's 100% owned El Castillo gold mine in Durango State, Mexico in March 2009, the remaining new pieces of equipment have arrived on site enabling enhanced mining to the targeted, expanded production level. The addition of this new equipment enables the mining of 800,000 tonnes per month total monthly mine production (waste and ore material) effective immediately. This rate represents an approximate 30 percent increase over the average monthly amount of material mined at El Castillo in the second quarter of 2009 and is a 70 percent increase over the amount of material mined in the fourth quarter of 2008, prior to the signing of the new mining contract and the arrival of new equipment.

The new contract provided for the mobilization of a fleet of larger mining equipment thereby enabling the ramp-up of production to in excess of 50,000 ounces of gold annually at reduced unit costs relative to the current contract. Under the terms of the new agreement, unit costs of the mined material are reduced by 10% relative to the previous terms. At the expanded mining rate of 800,000 tonnes per month, this offers savings of approximately US$25 per ounce of gold produced commencing July 1, 2009.

Thomas Atkins, President and CEO of Castle Gold commented on the ramp-up of production stating: "The operating team at El Castillo continues to successfully expand mining rates, which as this additional material is loaded on the pads, and as the waste to ore ratio is reduced over the next two to three quarters, will be reflected in higher gold production to 50,000 ounces per year and will result in further efficiencies and reductions in operating costs. The new equipment additions are a milestone in this expansion, however there has been a great deal of additional work performed by the technical team in ensuring the infrastructure to support this rapid doubling of production, including permits for the expansion, additional water supply, leach pad space and expansions to the gold recovery plant.

We remain focused on the expansion in production, but the management team isn't stopping there as we look to increase resources and reserves at El Castillo with a new resource study expected late in September 2009 based on the results from the Phase I resource expansion drilling. This resource modeling will help establish Phase II drilling to commence likely in early Q4 once the rainy season ends. Phase II drilling is planned to establish a new Measured and Indicated resource and new Proven and Probable reserves from this work. Our hope is that with success in this resource-reserve expansion program, by the time we have reached our 50,000 ounce production target in 2010, we will be advancing a further expanded production scenario, based on additional reserves at El Castillo."

The most recent new equipment additions are as follows:

- 4 Caterpillar CAT 740, 40 ton capacity articulated trucks;

- 1 Caterpillar CAT 988H, 8.5 yard capacity front-end-loader;

The total new equipment fleet is as follows:

- 8 Caterpillar CAT 740, 40 ton capacity articulated trucks;

- 2 Caterpillar CAT 988H, 8.5 yard capacity front-end-loader;

- 3 Atlas Copco ECM 590 RC, blast-hole drills for 3 1/2 inch diameter blast-holes;

- 1 Caterpillar CAT 416, back-hoe excavator; and

- 1 hydraulic hammer for secondary rock breaking.

It is expected that the combination of new and original equipment will permit mining at the expanded production target rate of 800,000 tonnes of waste and ore material per month effective immediately. An additional 2 - CAT 740, 40 ton trucks plus 1 - CAT 988H front-end-loader will arrive in September permitting maintenance of the new equipment that has arrived since April 2009 at a sustained production level of 800,000 tonnes of material mined per month. With the reduction of the waste:ore ratio in early 2010 towards the life-of-mine waste:ore ratio of 0.6:1.0, from current levels of 1.3 to 1.5 : 1.0 at present, higher volumes of gold production towards the 50,000 ounce per year level are expected.

About Castle Gold

Castle Gold Corporation is a growth oriented gold producer with projects focused in the America's. The Company owns a 100% interest in the El Castillo gold mine in Mexico and a 50% interest in the El Sastre gold mine in Guatemala. Castle Gold is also advancing exploration and development work at its La Fortuna gold-silver-copper project in Mexico.

TSX-V Trading Symbol: CSG
Total Shares Outstanding: 75.3MM
Fully Diluted: 82.8MM
52-Week Trading Range: C$0.15 - $0.80

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Castle Gold Corporation
    Thomas Atkins
    President and CEO
    416-214-4809 or Toll Free: 1 866 646 3274
    Castle Gold Corporation
    Rory Quinn
    Manager Investor and Public Relations
    416-214-4809 or Toll Free: 1 866 646 3274
    416-366-7421 (FAX)