By: Tomas Ronolski - AllPennyStocks.com News

Wednesday, August 7, 2013

Three weeks ago, we wrote about the trend in the mining industry of companies shutting down mines as commodity prices continue to fall. Well, after a brief reprise in selling that saw gold threaten once again to break over the 50 day moving average, bullion prices have slid back to near where they were at the time of the article. Gold futures fell for six straight sessions before finally snapping the losing streak on Wednesday with December gold, the most actively traded contract on the New York Mercantile Exchange, advancing a tepid 0.2 percent to settle at $1,285.30 per ounce. In a comeback story, Golden Band Resources Inc. (TSX-Venture:GBN) (OTCQX:GBRIF) said on Wednesday that it has resumed full operations at its La Ronge Gold Project in northern Saskatchewan after suspending operations on February 26. During the temporary shutdown, the company has successfully reorganized personnel, evaluated the operations for maximum efficiency and generated the necessary capital to refurbish the mill and gear back up for production.

Golden Band has been active in the La Ronge Gold Belt for 20 years. The company controls 870 square kilometers of land in the Belt, including 13 known gold deposits and four past-producing mines. The La Ronge Gold Project achieved commercial production in April 2011.

The Saskatoon-based company said that most of the mill renovations are done, work is completed on tailings ponds, roads have been built in preparation of production from the Golden Heart and Greywacke areas and redesign work has happened on the underground mine in the Roy Lloyd area. Further, a substantial stockpile of ore is ready to commence milling at full capacity. They certainly didn’t sit on their hands for five months.

Debt was reorganized and then Golden Band got a cash infusion to make the developments happen. Funding primarily coming from privately-held Procon Mining and Tunneling Ltd., a company that has directors in common with Golden Band. In June, the company announced that it entered into a short-term cost plus contract with Procon, whereby Procon agreed to provide pre-production and mine rehab services. Amongst other things, the deal also granted Golden Band a $20 million non-revolving credit facility that was, in part, used to get the mine back online.

The mill is now processing approximately 500 tonnes per day with intentions to ramp-up processing to the current maximum mining rate. The first gold pour is slated to happen before the end of the month.

Despite the setback, the company said the reorganization now has it prepared for future operations and can progress at a consistent mill throughput rate, which will help control overall expenses.

Investors will be looking for production resumption to kick revenues back in gear for Golden Band. With the first quarter suspension of operations, revenue declined by 62 percent to $6.43 million, compared to $17.05 million in the year prior quarter. Ounces of gold sold fell proportionately to 3,882. That led to the company swinging to a net loss from a nearly profitable quarter last year.

With the stockpiles ready to be processed, reorganization and re-work at the mines, the third quarter may be exactly what the doctor ordered for the share value. Apparently traders were thinking this may be the case as well. Shares surged 66.67 percent in Wednesday’s trading to close the day at 5 cents with 459,000 shares changing hands. Proper due diligence is, as always, encouraged.

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