Desert Sun Q1 loss widens on mine ramp-up

Toronto-based Desert Sun Mining's (TSX: DSM) net loss more than doubled in first quarter 2005 on higher costs as the company neared full reactivation of its Jacobina mine in Brazil, according to Desert Sun CEO Bruce Humphrey. The company posted a Q1 net loss of Cdn$1.7mn (US$1.4mn), an 113% increase from Cdn$800,000 in 1Q04. "The loss is related to the capital expenditures for the reactivation program" at Jacobina, Humphrey told BNamericas. "There is no revenue because we are still in construction mode." However, the lack of revenue is about to change. Desert Sun has gold at the refinery and the company's first gold sale is due to take place this week, Humphrey said. The first gold was poured at Jacobina in March. Jacobina mine construction in Bahia state is continuing and due to wrap up in 2Q05. The mine is expected to be at full production capacity by August, Humphrey said. "The key thing is we will be completed on schedule and on budget," he added. Jacobina's production ramp-up plan slowed down when two large production drills were delayed while entering Brazil. The drills, originally expected in January, arrived in March. "They were delayed a bit and we got a late start but they are in place now and drilling full time," Humphrey said. "It is just a question of getting enough ore drilled and broken to get up to a full production rate." The mine is expected to produce 100,000oz/y with a total cash cost of US$200/oz at full production, yielding 50,000-60,000oz in 2005, according to the company. Desert Sun's next development target will be the Morro do Vento zone, also in the 155km-long Bahia Gold Belt, to which the company holds exclusive mineral rights. The company expects to make a development decision on Morro do Vento in June. A drilling program is also under way at Canavieiras. So far in 2005, 12 holes totaling 1,516m have been drilled to test reefs below the old workings. Another 12 holes totaling 471m were drilled to test extensions of previously mined reefs. Two surface rigs and one underground rig are drilling at the site. An additional eight drill holes totaling 1,385m have also been drilled at Pindobacu. Further drill targets at the site have been identified using an induced polarization geophysical survey to identify anomalies, Desert Sun said.