Austindo studies alternate mining plan for troubled Cibaliung gold project

Australian firm Austindo Resources Corporation NL is studying alternate mining plan at its Cibaliung gold project in Banten province to enable it to commence production, albeit at limited rate, after it had put on halt the mine?s decline development on technical problems.

The company said in a report released Friday that it had fired the decline development contractor and is currently talking with new contractor to determine whether it was still appropriate to continue with decline development.

The company has also put gold processing plant construction on halt temporarily.

Austindo said the alternate mining plan called for development of alternative decline development to access lower grade ore that can be mined with hand-held methods and then continue to the mine ore body where mechanized mining could commence.

This method, the company said, would allow the plant to process lower grade ore stockpiled from ore mined during decline development and could generate cash while decline development continued. The company hinted if the alternate plan was adopted it could commence gold pour second half of this year at best and production would be far below initial plan.

The troubles has caused the company to experience significant costs pressure, and it may need to raise additional equity potentially in excess of US$20 million to complete the development. Austindo said t has appointed Austock Corporate Finance Limited to review the company?s funding alternatives, which might involve the introduction of a cornerstone development.

The company initially targeted project cost on the project at $34 million. The project is slated to produce 70,000 ounces of gold per annum for at least six years starting May 2007. (alex)