Pilbara gold miner Millennium Minerals is on track to hit its full-year guidance of 75,000 to 80,000 ounces as investments in its Nullagine project start to bear fruit.

Millennium’s (ASX:MOY) September quarter gold production came in at 16,007 ounces for $1470 an ounce cost. Gold sales revenue for the quarter was $25.5 million, which was achieved at an average realised gold price of $1642 an ounce.

Production is tipped to rise in the current quarter to 24,000 to 26,000 ounces, a 50 to 62 per cent increase. December quarter costs would fall to $1200 to $1250 an ounce at Nullagine.

The production increase and cost reduction was due to investment in developing bigger, longer-term ore sources, Millennium chief Peter Cash said.

Completion of the Bartons cut-back and mine development for the Majuba Hill deposit would underpin significant increase in December quarter gold production and a corresponding decrease in costs.

Millennium had made progress towards longer-term growth initiatives.

“We completed an expansion study, which has confirmed the economic and technical merits of building an integrated CIL and flotation plant that will enable us to process the significant amount of fresh ore ounces we have within our resource base,” Mr Cash said.

“In addition, we are now on the cusp of developing our first-ever underground mine at Nullagine with the completion of a maiden mineral resource estimate and scoping study for the Bartons underground development.

“Feasibility studies on both the processing plant upgrade and the Bartons underground development are now underway.”

Millennium’s long-term strategy is to deliver a minimum five-year mine life at Nullagine based on annual gold production of 100,000 ounces per annum.

Meantime, Millennium’s exploration campaign is continuing with four reverse circulation rigs and one diamond rig now on site at its Nullagine project.

Yesterday, Millennium reported strong exploration results from Au81 West prospect and Shearers prospect at Nullagine.

Results from Au81 West prospect, located 3km from the processing plant, include 11 metres at 11.69 grams per tonne gold from 43 metres including 6 metres at 19.62 grams per tonne gold.

At Shearers North, recent results include 20 metres at 1.42 grams per tonne gold from 9 metres.

Millennium will now fast-track work at Shearers to assess its underground potential.

Millennium has cash and bullion of $20.1 million and no debt at end of September.  Cash outflows tipped for the current quarter are around $33 million.

Millennium’s shares were trading 3 per cent higher at 17c in Thursday afternoon trade, valuing the company at about $133 million.

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