29th Oct 2009 07:34
Norseman Gold plc / Epic: NGL / Index: AIM / Sector: Mining & Exploration
NORSEMAN GOLD PLC
('Norseman Gold' or the 'Company')
OK Decline Approval and Exploration Update
Norseman Gold, the AIM-listed and ASX-listed Australian gold production and exploration company announces that it has approved the commencement of the OK Decline, the third mine at its Norseman Gold Project.
Summary
The detailed mining study on the OK Decline has returned a positive result, and the Company has approved its immediate commencement, adding a third mine to the Norseman Gold Project. The expected production from this mine will increase the utilisation of the Company's treatment plant and is the first successful stage of the strategy to fill the Phoenix mill.
The initial two year mine life is based on an initial OK Decline Reserve of 57,000 ounces of gold (350,000 tonnes at a grade of 5.1 g/t gold), while the potential to extend mine life is provided from the opportunity to further convert Resource to Reserve from the upgraded OK Decline Resource of 200,000 ounces of gold (850,000 tonnes at a grade of 7.3 g/t gold).
Development is expected to commence in the December 2009 quarter with first ore expected to be produced in the March 2010 quarter.
As a result of the approval to commence mining at the OK Decline the Company has upgraded its full year forecast to between 80,000 to 85,000 ounces of gold (previously 75,000 to 80,000 ounces of gold) at a cash operating cost of between A$720 and A$780 per ounce in the 2009/10 financial year.
The Company also provides new guidance of between 105,000 to 110,000 ounces of gold at a cash operating cost of between A$670 and A$730 per ounce in the 2010/11 financial year from the Bullen, Harlequin and OK Declines.
Dewatering underway at the potential fourth mine, North Royal, with a drill programme to the south end of the pit to be undertaken in the December 2009 quarter.
OK Decline
The OK Decline detailed mining study has now been completed and the Board has approved commencement of the project. The study has returned positive outcomes and shows that the Reserve can support a mining operation over an initial two years producing approximately 57,000 ounces of gold.
The production profile will commence with approximately 5,000 ounces of gold in the current financial year and approximately 30,000 ounces of gold in the 2010/11 financial year with the balance in the following year after that.
The mining study involved the mining of new resources to the west of and below current workings at the O2 and OK Main Reef, as well as some pillar recovery work within the existing workings. The mining methods used will be mechanised stoping as the reef tends to dip closer to vertical than the usual flatter Norseman style reef. This will allow the Company to economically mine ore of a lower grade than with the more labour intensive air-leg methods.
The capital investment in the OK Decline in the current 2009/10 financial year totals A$18.0M of which A$4.8M is capital development and A$13.0M is site infrastructure and mobile equipment. The sustaining capital in subsequent production years will then reduce to about A$5.0M per annum as per the other two operating declines.
Net cash operating costs for the current life of mine at the OK Decline are in the order of A$670 per ounce recovered with projected life of mine net cashflow in the order of A$15.0M. The increase in the production profile contributed by the OK Decline will result in savings to the Norseman operation through a reduction of overheads and better utilisation of the treatment plant.
As a result, the Company is confident to upgrade its full year forecast to between 80,000 to 85,000 ounces of gold recovered ( previously 75,000 to 80,000 ounces of gold from the Bullen and Harlequin Declines only) at a cash operating cost of between A$720 and A$780 per ounce in the 2009/10 financial year. The forecast in the current financial year reflects the fact that the majority of the ore that is mined from the OK Decline is from ore development. In the following financial year 2010/11 the guidance is for between 105,000 to 110,000 ounces of gold recovered at a cash operating cost of between A$670 and A$730 per ounce from the Bullen, Harlequin and OK Declines. This full year guide more clearly reflects the impact of the OK Decline on the operations once the decline is in normal development and stoping mode.
Ahead of commencing mining at the OK Decline the Company has placed an order for an additional 40 rooms for the site camp to enable the new workforce to be accommodated. Installation is expected to take place in the December 2009 quarter. Personnel recruitment is also underway with applications already being received for key positions. Key items of the mobile equipment fleet have arrived on-site, including the two boom jumbo, ready for the project to start.
Drilling continues at OK Decline and the resource inventory currently totals 200,000 ounces of gold, including resources from the Star of Erin, which is not the subject of the detailed mining study. The Company is therefore very confident that the reserve and hence life of the OK Decline will increase as this drilling continues to progress. The resource and reserve statement for the OK decline is listed below.
Table 1: OK Underground Resource and Reserve Summary October 2009
|
Summary for Norseman |
OK Underground - 31 March 2009 |
OK Underground - 16 October 2009 |
||||
|
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
|
|
Reserve - Proved |
0 |
0 |
0 |
69,000 |
6.8 |
15,000 |
|
Reserve - Probable |
0 |
0 |
0 |
290,000 |
4.5 |
42,000 |
|
Total Reserve |
0 |
0 |
0 |
350,000 |
5.1 |
57,000 |
|
Resource - Measured |
24,000 |
3.4 |
2,600 |
130,000 |
6.5 |
27,000 |
|
Resource - Indicated |
27,000 |
8.1 |
7,000 |
350,000 |
6.2 |
70,000 |
|
Resource - Inferred |
270,000 |
7.6 |
66,000 |
370,000 |
8.2 |
98,000 |
|
Total Resource |
320,000 |
7.4 |
76,000 |
850,000 |
7.3 |
200,000 |
Notes: 1. As is required the Resources and Reserves are calculated and reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code, 2004 Edition.
2. Resources are inclusive of reserves.
3. Resources and reserves are quoted to two significant figures so inconsistencies may exist within the table.
Competent Persons Statements
Resources included in this report were either calculated by or reviewed by Mr Jonathan Sharp BSc. MSc. (hons), who is a Member of the Australasian Institute of Mining and Metallurgy, and the Resource Geologist for the Company. Mr Sharp has over 15 years of Mining experience in a variety of mineral deposit styles and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Sharp consents to the information in this report being used and quoted by the company for reporting and other purposes in the context in which it appears.
Underground drilling continued into the OK West area with significant results returned to date, which are included in the OK Decline Resource, as listed below;
2.3m @ 2.6 g/t gold from 4.0m and
2.3m @ 6.4 g/t gold from 71.0m includes
1.0m @ 8.3 g/t gold from 71.0m in drill-hole OKD141
0.6m @ 85.6 g/t gold from 67.5m and
0.7m @ 7.3 g/t gold from 75.6 m in drill-hole OKD142
0.6m @ 24.1 g/t gold from 222.4m and
4.0m @ 2.4 g/t gold from 230m in drill-hole OKD143
1.0m @ 8.4 g/t gold from 92.0m and
0.5m @ 11.0 g/t gold from 196.3m and
2.4m @ 47.0 g/t gold from 252.0m in drill-hole OKD148
1.6m @ 3.5 g/t gold from 36.9m includes
0.6m @ 7.6 g/t gold from 36.9m in drill-hole OKD153
1.0m @ 6.7 g/t gold from 60.0m and
1.8m @ 4.3 g/t gold from 192.0m in drill-hole OKD154
1.9m @ 7.5 g/t gold from 202.0m and
0.6m @ 27.9 g/t gold from 223.0m in drill-hole OKD156
0.9m @ 110.1 g/t gold from 197.1m in drill-hole OKD157
4.7m @ 2.7 g/t gold from 231.3m in drill-hole OKD158
0.3m @ 21.2 g/t gold from 161.9m in drill-hole OKD162
33.2m @ 1.0 g/t gold from 158.8m in drill-hole OKD165
2.5m @ 4.6 g/t gold from 134.1m includes
0.7m @ 9.6 g/t gold from 134.1m and
0.9m @ 5.0 g/t gold from 136.3m in drill-hole OKD183
10.7m @ 2.2 g/t gold from 69.0m includes
0.5m @ 11.9 g/t gold from 71.5m and
1.0m @ 4.0 g/t gold from 72.0m in drill-hole OKD184
0.5m @ 45.4 g/t gold from 46.7m in drill-hole OKD185
0.3m @ 16.8 g/t gold from 147.1m in drill-hole OKD187
1.2m @ 7.7 g/t gold from 45.0m includes
0.2m @ 42.8 g/t gold from 46.0m in drill-hole OKD188
1.7m @ 33.2 g/t gold from 177.4m includes
0.8m @ 67.1 g/t gold from 177.4m in drill-hole OKD189
9.0m @ 2.2 g/t gold from 150.0m includes
0.5m @ 12.7 g/t gold from 151.0m and
0.5m @ 15.7 g/t gold from 151.5m in drill-hole OKD190
1.0m @ 17.6 g/t gold from 103.0m includes
0.3m @ 56.8 g/t gold from 103.0m in drill-hole OKD191
Results have been received from Golden Goose surface drilling, with significant results as listed below;
0.5m @ 14.9 g/t gold from 180.0m in drill-hole GGD016
Results have been received from Royal Coachman surface drilling, with significant results as listed below;
8.0m @ 0.9 g/t gold from 46.0m includes
1.0m @ 3.3 g/t gold from 51.0m in drill-hole RCD005
The next round of Golden Goose and Royal Coachman drilling will now be undertaken from locations at the OK Decline as part of the underground drilling programmes. The resources targeted by this drilling will be able to be easily accessed underground from the OK Decline.
North Royal
The Company is pleased to announce that the dewatering of the North Royal open pit has commenced, with the successful commissioning of the pumping infrastructure. This is expected to take approximately four months to complete provided weather conditions are favourable. The resources at the northern end of the pit can then be drilled to allow mining studies to be completed and, assuming a positive outcome to the studies, this will allow mining of this resource to commence.
The Company also intends to commence the first phase drilling programme at the southern end of the North Royal open pit. This drilling can be conducted without the necessity for the pit to be dewatered. It is anticipated that this drilling will contribute to further analysis on the potential of mining the southern end of the open pit.
Crown Reef
The Crown Reef was not advanced during the quarter. The drilling programme at the Crown Reef will commence following the completion of the drilling at the OK Decline.
Competent Persons - Consent for Release
The information in this report that relates to Exploration Results, Mineral Resources and Ore Reserves is based on data generated by employees of Central Norseman Gold Corporation Limited who have the relevant experience and qualifications to qualify as competent persons.
The parts of this report that relate to Exploration Results, Mineral Resources and Ore Reserves were compiled by Barry Cahill using that data. He is a Member of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". He has consented to the inclusion in the report of the matters based on this information in the form and context in which it appears.
Forward-Looking Statements
This regulatory news release contains certain forward looking statements, which include assumptions with respect to future plans, results and capital expenditures. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Please refer to the Company's Admission Document available from the Company's web site for a list of risk factors. The Company's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive there from. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release.
* * ENDS * *
For further information visit www.norsemangoldplc.com or contact:
Barry Cahill Norseman Gold Plc Tel: +61 (0) 8 9473 2200
Guy Wilkes Ocean Equities Ltd Tel: 020 7786 4370
William Vandyk Astaire Securities Plc Tel: 020 7448 4400
Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7236 1177
E-mail [email protected]
Note to editors:
Norseman Gold plc is an AIM listed and ASX listed Australian gold production company, which acquired the Norseman Gold Project in May 2007, Australia's longest continually running gold operation. The Norseman Gold Project is located in the Eastern Goldfields of Western Australia in the highly prospective Norseman-Wiluna greenstone belt, 725km east of Perth and 186km from Kalgoorlie.
Gold was first found on the Norseman field in 1894 and over the last 65 years it has produced over 5.5 million oz of gold. The mine is currently producing from two high-grade narrow-vein underground mines - the Bullen and the Harlequin. Currently, it has a total resource inventory of 3.7 million oz of gold at an average grade of 5.5 g/t.
The tenements cover a 1,614 sq km area centred on the Norseman Township. The landholding comprises 179 contiguous tenements consisting of 13 Exploration Licences, 106 Mining Licences, 45 Prospecting Licences, 15 Miscellaneous Licences and 29 Mining Lease Applications.
The Company's strategy is focused on extending the mine life through the conversion of resources into reserves and identifying additional resources and obtaining additional ore for the operating mill through the development of a third and subsequent mines. The Company has 15 advanced resource projects under review of which 3 have pre-development work being undertaken on them. It is anticipated that at least one if not all the pre-development projects will develop into mining propositions.
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