* Sees cash cost/ounce trending towards $800 by year-end
* Sees recovery rates, grades stable at Sept levels
* Says on track to meet 85,000 ounces output in 2010
* Says September production 9,789 ounces of gold
* Says Q3 production 26,138 ounces (Adds details, company comments)
Oct 6 (Reuters) - Canadian gold miner Crocodile Gold Corp CRK.TO said it expects recovery rates and production grades at its Australian mines to remain steady for the rest of the year, but the cash cost will be more than what it forecast in May.
The company said it expects cash cost per ounce to trend towards $800 by the end of the year.
In May, the junior miner had said it was expecting to produce 100,000 ounces at $700 per ounce, but later reduced its production outlook to 85,000 ounces.
The company said it remains on track to meet the production target, with 59,443 ounces of gold produced so far this year.
Crocodile Gold expects costs to decrease in 2011 when its Cosmo underground mine -- where the grade is higher at about 4-5 grams per tonne -- goes into production.
“The more ounces we produce, the lower the costs should be, as a number of costs are fixed and they are dependent on grade,” said Ashleigh Clelland, manager, investor relations.
The company, whose mines are located in the Northern Territory of Australia, produced 9,789 ounces of gold in September.
Crocodile Gold produced 26,138 ounces of gold in the third quarter, up from 19,644 ounces of gold in the second quarter.
In September, it milled 185,458 tonnes of ore at a head grade of 1.75 grade per tonne (g/t) at a recovery rate of 94 percent.
This compares with the 189,232 tonnes processed at an average grade of 1.46 g/t and a recovery rate of 91.7 percent in August.
Shares of the Toronto-based company, which have lost over 36 percent of their value in the last six months, were up 23 percent at C$1.44 Wednesday on the Toronto Stock Exchange. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Don Sebastian)