gold price - by David Haselhurst.

Gold price soars to record
While Citigold’s report largely escaped public attention, the Australian dollar gold price soared on Monday to a record $A1470/oz, based on a price that day of $US927/oz and an exchange rate of $A/$US0.63.
It has come back slightly since but remains in line with leading broker predictions. Both Morgan Stanley and UBS have raised their short term gold price projections for 2009 to $US900/oz, with UBS predicting $US1,000/oz in 2010.
That spells promise for Citigold with a target to reach annual production of 250,000oz by 2011, rising to 310,000oz by 2012, with a projected mine life of 30 years based on a present resource of 10 million oz of gold within 22 million tonnes or ore grading 14 gm/tonne.
The ambitious targets are under-pinned through a $35 million cash commitment from Dubai Ventures Group which will ultimately hold an 18% equity in the company.
Those longer term projections have tested the patience of some investors in today’s cash-strapped market, however. In January a sole US investor in need of cash dumped its holding of 5 million shares on the market and sold the stock down to as low as 18c, although the company has since recovered somewhat. At 20.5c, the company’s 736.2 million shares carry a market capitalization of $147 million.
Cash has been run down in the latest quarter by nearly $10 million in development expenditure, offset by $4.79 million in sales from modest production of 2569oz of gold from low grade material excavated in developing access to ore lodes.
At the end of the quarter, the company had $15 million in an undrawn advance from the Dubai fund and the company expects a significant increase in gold production in the current quarter.
The December quarter saw underground development advance 835 metres (including the western decline from the surface), so the company now has two production areas from which to access ore from the Warrior Reef in the current quarter with a third area to be accessed towards the end of this quarter on a parallel reef with initial face grades running as high as 20gm/tonne gold.