Embattled junior Crater Gold Mining is frustrated by ongoing mining delays at its 790,000 ounce Crater Mountain gold project in PNG, but hopes new mining equipment and a $23 million rights issue will change its fortunes.

With the processing plant undergoing upgrades and production running at “minimal levels”, the new gold miner (ASX:CGN) has produced of just 66 ounces of gold so far.

In January, the company announced it would raise about $23m to bolster its flagging balance sheet, with the miner holding just $121,000 in the bank by the end of December.

The rights issue hopes to raise the cash from the sale of about 1.5 billion shares at an issue price of 1.5c per share.

Crater anticipated that the High Grade Zone (HGZ) mine at Crater Mountain – which has an inferred resource of 44,500 tonnes at 11.9 grams per tonne gold for 17,100 ounces — would generate sufficient cashflow to fund further mine expansions and exploration.

Crater says it has produced about 66 ounces so far from the HGZ mine.

In August last year, the company told investors that initial production from the HGZ mine could potentially eliminate the need for further external capital to fund exploration activities in the future.

Crater Gold Mining managing director Russ Parker says the Company is exasperated by the delays.

“However during this time we have been planning and carrying out improvements to the mine and fully expect these to have a very positive effect on gold mining production rates at the HGZ,” he said.

The company’s share price remains unchanged at 1.2 per share.

The Crater Gold share price over the past 12 months.
The Crater Gold share price over the past 12 months.