Vatukoula Gold Mines, which owns the Vatukoula mine in Fiji has seen a sharp drop in its stock price as it revealed growing development expenditure it hitting production rates.

In the three months to the end of August the site produced 120,000 tonnes of ore compared to the 115,000 in the preceding quarter but this appears to be below market expectations. The "grade" of the rocks, which means how much gold they actually contain, rose from 3.55 to 3.89 grams per tonne.

Vatukoula is certainly spending money to increase productivity. Capital investment in the 12 months to the end of August was £16.2m, versus £11m in the prior year. This left total cash at just £2.4m compared to £12.8m in August 2011.

David Paxton, Vatukoula Gold Mines Chief Executive said: "The increase in capital development has impacted on our short-term gold recoveries, but in the longer-term will enable Vatukoula to realise our production targets. These results should therefore be seen in the context of our efforts to transform the mine's underground mining prospects and realise our overall operational objective of long-term economic mining."

The shares were down 10.6% in morning trading.

BS

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