Crocodile Gold Corp.
TSX : CRK
FRANKFURT : XGC
OTCQX : CROCF

Crocodile Gold Corp.

February 28, 2011 08:05 ET

Crocodile Gold Provides Operational Update

TORONTO, ONTARIO--(Marketwire - Feb. 28, 2011) - Crocodile Gold Corp. (TSX:CRK)(OTCQX:CROCF)(FRANKFURT:XGC) ("Crocodile Gold" or the "Company") announces an operational update at its operations in the Northern Territory of Australia.

Highlights of the update are as follows:
  • Recent strategic review of the operation by management conclude that acceleration of exploration and further investment in infrastructure in 2011 will increase production to over 200,000 ounces a year by 2012

  • Recent internal review of the Union Reefs drill results present Crocodile Gold with opportunity to accelerate exploration and development of potential new underground ore source at Union Reefs

  • Crocodile Gold has begun dewatering the Cosmo open pit by transferring water to the historic Alligator pit

  • Following completion of a highly competitive tender process Crocodile Gold is pleased to announce it has negotiated a 3 year mining contract for the development of the Cosmo underground mine with Leighton Contractors' Resources Division

  • Crocodile Gold is continuing to optimize the design for the Cosmo underground mine with its consultants to maximize the early delivery of tonnage and grade to the mill

  • Despite record monsoonal rainfall at the minesite from October to late February, Crocodile Gold has continued to produce gold albeit at lower levels in January and February (with February 2011 being the wettest on record with over 1000 millimeters recorded). Typically January and February are the worst months of the wet season.

 
Operations Update
  • Crocodile Gold management as part of a strategic review of the operation has concluded that there is an excellent opportunity to accelerate exploration to accomplish the following objectives:

    • Continue to increase the overall resource by accelerating exploration expenditures at key areas such as Cosmo, Union Reef and other key trends such as Pine Creek, Howley and Princess Louise

    • The recent drill results at Prospect of 6.9 g/t Au of 10 meters and 11.2 g/t Au of 4 meters (see Press Release February 22, 2011) show that the potential exists to developing an underground mine at Union Reef with potential production by the 4th quarter of 2011. The higher grade mineralization at Union Reefs, located adjacent to the mill adds the potential for increased production and lower cost ounces. Longer term, areas such as the historic Crosscourse deposit where 700,000 ounces have been mined with historic intersections below the pit bottom of 4 g/t Au over 36 meters and 24.4 g/t Au over 9 meters offer the potential of another deposit similar to Cosmo in scale but located immediately adjacent to the mill

    • The large and growing resource base offers excellent potential to examine expanding the Union Reef mill by installing a new SAG mill with other improvements to both increase capacity and provide stable production during the wet season.

  • Together with the rest of Australia, the Company's operations have been impacted by abnormal rainfall. Since the beginning of the monsoonal season in October over 2,447 mm of rain has fallen to February 27 2011 which is 95% higher than the normal long term average of 1,250 mm of rain. The current wet season rainfall is close (120 mm shy) to an all time record. Other mining operations in the Northern Territory including ERA and Territory Iron are being similarly affected by above average rainfall. In particular Cyclone Carlos brought over 640 mm of rain between February 15th and 17th, 2011. Despite the above average rainfall Crocodile Gold has been able to continue gold production albeit at lower rates during the worst of the rains. In anticipation of a major wet season, major preventative maintenance programs to the Union Reefs mill were undertaken for January and February which will provide high (>95%) mill availabilities for the remainder of the year.

  • Crocodile Gold has now received permits to dewater the Cosmo open pit and transfer water to the historic Alligator open pit. Pumping began this week and it is expected that pumping of the pit should be completed by the third quarter 2011. The critical path of Cosmo underground development is to have water levels reduced (by 15 metres) in the pit near a ventilation raise breakthrough in May 2011 so the permanent ventilation system can be established. The ventilation raise should be completed early in the third quarter of 2011.

  • Following the completion of a highly competitive tender process, Leighton Contractors' Resources Division has been selected for a 3 year contract for the mining and development of the Cosmo underground mine. The terms of the contract are consistent with the average mining costs detailed in the 2007 Cosmo Underground Feasibility study which Crocodile Gold is currently optimizing with its consultants. Leighton Contractors' Resources Division is currently mobilizing to site and expects to begin development shortly.

  • Crocodile Gold has completed a review of the Cosmo underground design work and with its consultants is currently working through a number of optimizations to maximize overall production and recovery of the ore. With the extra rainfall received and delays in dewatering the Cosmo pit Crocodile Gold expects development ore to be mined later in the second quarter and production ore later in the third quarter of 2011.

  • Crocodile Gold expects that permits for the mining of the International pit at Pine Creek will not be received until the second quarter of 2011 based on recent dialogue with Northern Territory government officials.

  • It now appears that the majority of ore mined in 2011 will be open pit ore, with higher grade underground ore from Brocks Creek in the first quarter of 2011 and ore from Cosmo being sent to the mill from later in the second quarter. Plans are currently being undertaken to maximize the amount of open pit material above a 1 gram/tonne gold cut off grade to maximize the amount of higher grade material sent to the mill.

  • As detailed in the press release of February 15, 2011, Crocodile Gold has initiated drilling at some assets in the Union Reefs area, targeting high grade underground targets in particular at the Crosscourse, Prospect and Lady Alice deposits. Crocodile Gold also expects to shortly begin drilling underground at the Cosmo deposit.

  • Based on production during January and February and assuming progressively better weather as the wet season diminishes, Crocodile Gold expects to produce 14,000 to 17,000 ounces of gold in the first quarter of 2011. For 2011 Crocodile Gold expects to produce 85,000 to 100,000 ounces at a cash cost of US$875 to US$975 per ounce.

  • Crocodile Gold expects to provide an update on the reserves and resources in early March.

In releasing this information, Dave Keough, Chief Operating Officer of Crocodile Gold, commented, "The recent strategic review shows that it is imperative we continue to aggressively explore our tenement package as there is excellent potential to further increase production and lower costs. We are very excited by the near term potential of an underground operation at Union Reef. As with other mining operations in the Northern Territory, production and future development are being affected temporarily by above average rainfall. It is a credit to our team that we have been able to maintain production, albeit at a slower rate, during this period."

About Crocodile Gold

Crocodile Gold is a Canadian company with operating gold mines in the Northern Territory of Australia and a land package of over 2,500 km2. Crocodile Gold is currently mining from the Howley, North Point and Princess Louise open pit mines and the Brocks Creek underground mine. Crocodile Gold commenced mining in November 2009 and announced its first gold pour in December 2009 at its Union Reefs Mill. The Company is currently developing the Cosmo underground mine. Ore is currently processed at the 2.4 million tonne per year Union Reefs Mill. Crocodile Gold has 3.5 million ounces of NI 43-101 compliant measured and indicated resources (57 million tonnes at an average grade of 1.9 g/t gold) and 2.2 million ounces of inferred resources (38 million tonnes at an average grade of 1.8 g/t gold) (see the Amended Annual Information Form dated November 5, 2010 and Crocodile Gold press releases dated September 8, 2009, January 25, 2010, October 14, 2010 and December 2, 2010).

Qualified Person

David Keough, MAusIMM of Crocodile Gold Australia Operations is a "qualified person" as such term is defined in National Instrument 43-101 and has reviewed and confirmed the technical information and data included in this press release.

Cautionary Note

Certain information set forth in this press release contains "forward-looking statements", and "forward-looking information" under applicable securities laws, including management's assessment of Crocodile Gold's targeted production, future plans, operations, weather forecasts and mineral resource estimates and are based on Crocodile Gold's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking statements may be identified by words such as "expects" "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Crocodile Gold's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to those risks described in the annual information form of the Company. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Crocodile Gold undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. 

To view figure 1, please visit the following link: http://media3.marketwire.com/docs/crk228fig1.pdf

Contact Information

  • Crocodile Gold Corp.
    Michael Hoffman
    President and CEO
    416-861-2964
    or
    Crocodile Gold Corp.
    Investor Relations
    416-861-5899
    info@crocgold.com