30th Jul 2010 07:00
Norseman Gold plc / Epic: NGL / Index: AIM / Sector: Mining & Exploration
NORSEMAN GOLD PLC
('Norseman Gold' or 'the Company')
Three Month Report On Activities For The Period Ended 30 June 2010
Norseman Gold, the AIM-listed and ASX-listed Australian gold production and exploration company is pleased to announce a three month progress report on its activities for the period to 30 June 2010.
|
Overview |
|
3 Months to 30/06/10 |
3 Months to 31/03/10 |
|
Production |
oz |
14,469 |
14,114 |
|
Average Realised Gold Price |
A$/oz |
1,343 |
1,224 |
|
Operating Cash Cost |
A$/oz |
943 |
990 |
|
Project EBIT |
A$(m) |
0.8 |
0.7 |
|
Capital Investment |
A$(m) |
8.6 |
8.8 |
|
Cash at Quarter End (incl. bullion) |
A$(m) |
16.7 |
21.7 |
|
|
|
|
|
Gold production from the Norseman Gold Project during the three months to 30 June 2010 totalled 14,469 ounces at a cash operating cost of A$943 per ounce gold, generating a Project EBIT of A$0.8m. Full financial year 2009/10 production totalled 60,464 ounces at a cash operating cost of A$932 per ounce gold, generating a Project EBIT of A$3.1m.
OK Decline continued development during the quarter with ore development opening up areas for stoping in the first half of the new 2010/11 financial year.
Dewatering at North Royal Open Pit has continued and 46% of the water volume was pumped by the end of the quarter. The Company has submitted documents required for regulatory approval and is currently working through the process with the relevant government departments. Resource optimisation has commenced and sterilisation drilling for the proposed waste dump location is expected to commence in the September 2010 quarter.
The Company's capital investment continued during the quarter with the development of the OK Decline resulting in the expenditure of A$8.6M on exploration, capitalised mine development and equipment.
The Company now has four underground diamond drill rigs drilling continuously at its operations. The rigs are expected to complete over 80,000 metres of underground drilling during the 2010/11 financial year to ensure that the resource and production growth at Norseman continues.
Operating Review
Gold production from the Norseman Gold Project during the three month period to 30 June 2010 totalled 14,469 ounces. The production during the quarter continued in lower grade areas, with the focus remaining on capital and ore development to open up areas for future stoping. For the quarter, the Bullen Decline contributed 4,170 ounces, and the Harlequin Decline contributed 9,641 ounces with 561 ounces from development ore at the OK Decline. The remaining 97 ounces came from the treatment of low grade stockpiles.
The gold price received during the quarter ranged from A$1,220 to A$1,468 per ounce, with an average price achieved of A$1,343 per ounce. Average gold price received for the year was A$1,228 per ounce. The operations remain un-hedged with a gold price of A$1,332 per ounce at the date hereof.
Production
|
|
|
3 months to 30/09/09
|
3 months to 31/12/09
|
3 months to 31/03/10
|
3 months to 30/06/10
|
|
Capital Development |
metres |
663 |
767 |
744 |
415 |
|
Ore Development |
metres |
1,617 |
1,152 |
1,272 |
1,682 |
|
|
|
|
|
|
|
|
Development |
tonnes |
55,327 |
41,210 |
41,329 |
46,622 |
|
Grade |
gAu/t |
2.26 |
2.98 |
2.28 |
2.69 |
|
|
|
|
|
|
|
|
Mechanised Stoping |
tonnes |
8,018 |
15,967 |
12,193 |
11,770 |
|
Grade |
gAu/t |
2.70 |
2.61 |
2.50 |
1.80 |
|
|
|
|
|
|
|
|
Airleg Stoping |
tonnes |
42,924 |
38,082 |
35,367 |
30,145 |
|
Grade |
gAu/t |
8.61 |
8.75 |
9.15 |
10.55 |
|
|
|
|
|
|
|
|
U/G Production |
tonnes |
106,269 |
95,259 |
88,889 |
88,537 |
|
|
|
|
|
|
|
|
Treated Tonnes |
tonnes |
106,010 |
96,043 |
89,047 |
89,015 |
|
Grade |
gAu/t |
4.86 |
5.21 |
5.05 |
5.23 |
|
Recovery |
% |
97.5% |
97.7% |
97.7% |
96.7% |
|
|
|
|
|
|
|
|
Recovered Ounces |
ozs |
16,160 |
15,721 |
14,114 |
14,469 |
During the June 2010 quarter, the Company continued the focus on capital and ore development to open up stoping areas for production completing over two kilometres of underground development for the quarter. The Company has now achieved over eight kilometres of capital and ore development for the 2009/10 financial year.
Capital development at Bullen continued in the Norseman Incline where it is expected to access the upper portion of the high grade St Patricks reef in August 2010. Ore development continued on the Bullen 2100 level and in the St Patricks reef.
Harlequin Decline continued to perform to expectations during the quarter. Ore development concentrated on the Redfin-Perch reef to open up blocks for airleg and mechanised stoping.
Development at the OK Decline continued during the quarter, with capital development focussing on refurbishment of the decline to access the 14 Level which will allow electrical and pumping infrastructure to be installed. This infrastructure installation will set the platform for the next stage of the production ramp up.
OK Decline ore development continued on Star of Erin, 02 and 03 reef with lower grade ore encountered in the initial development levels as expected. Further levels for development will be opened up once the 14 Level electrical infrastructure is installed.
Overall, production for the quarter delivered 14,469 ounces of gold recovered and production for the full 2009/10 financial year delivered 60,464 ounces of gold recovered. This was not in line with expectations so measures have been taken to improve performance in the coming months. OK Decline is expected to steadily increase its production profile with more ore development undertaken and stoping commencing in the September 2010 Quarter. Also the Bullen Decline is expected to access new mining areas resulting in further stabilisation of the production profile.
The Company forecast for the 2010/11 financial year remains at 105,000 to 110,000 ounces recovered at cash costs of between A$670 to A$730 per ounce of gold. This forecast is based on increasing the production profile at the mining operation as part of the "fill the mill" strategy. The Company is committed to this strategy and has made significant progress in the development of the OK Decline and progress on the North Royal Open Pit, which it is anticipated will commence in the December Quarter 2010.
Operating Costs
As a result of the lower production profile, the net direct cash operating costs per ounce for the quarter were A$943 per ounce of gold recovered. The net direct cash operating costs for the full 2009/10 financial year were $932 per ounce of gold recovered. As the production profile increases through the new 2010/11 financial year, the Company expects these cash costs to reduce to forecast levels.
From an accounting profit and loss point of view, the Norseman Project generated Earnings Before Interest and Tax ('EBIT') of A$0.8 million for the quarter and A$3.1 million for the full financial year. The Norseman Project EBIT does not include the corporate costs of Norseman Gold Plc.
Cash Balances
Cash balances at the end of the period totalled A$16.7 million (A$13.6 million excluding bullion). Approximately A$5.5 million of this cash balance is committed to cash-backed environmental bonds.
Capital Expenditure
Capital expenditure continued to be focussed around the development of the OK Decline. Further expenditure was committed to drilling and pre-development work at the North Royal Open Pit.
A total of A$8.6 million in capital was invested during the quarter bringing the total investment in the full 2009/10 financial year to A$35.3 million. Significant capital expenditures made during the quarter were on mobile equipment (A$3.0 million), exploration (A$1.7 million) and capitalised mine development (A$3.2 million).
Mine Exploration
The Company now has four underground drill rigs operating continuously at its Norseman Gold Project. During the quarter three rigs (including the exploration diamond drill rig) were drilling at Bullen Decline and one rig was drilling at Harlequin Decline. These four rigs are expected to complete over 80,000 metres of drilling for the full 2010/11 financial year which will further strengthen the Company's growth strategy by adding to the resource inventory.
Harlequin drilling focussed on targets that might provide another work area away from the current concentration around the Redfin-Perch reef. Drilling was initially conducted on the Redfin Footwall reef to determine if the previously mined area had any further up-dip or strike extent. This programme did not expand the resource significantly.
At the Redfin reef significant drilling results have been received as follows:
·; 1.8m @ 3.0 g/t gold from 51.4m in drill-hole HD1835
Diamond drilling has now commenced testing a possible continuation of the main HV1 reef to the north north-east.
Diamond drilling at Bullen has continued to make good progress with the focus on increasing resources around the currently active workings. Drilling tested potential Norseman reef underneath and to the south of current development, Norseman reef to the north of the Mt Barker fault, St Patrick's reef to the north of current development, St Patrick's and Mararoa reef intersection, Mararoa reef targets underneath recently completed long-hole stoping and the Mararoa Footwall target in the vicinity of previous drilling with significant results as outlined below:
St Patrick's reef drilling:
·; 3.1m @ 7.1 g/t gold from 95.7m in drill-hole BN770
Norseman reef drilling:
·; 0.8m @ 471.5 g/t gold from 9.0m and
·; 0.2m @ 69.5 g/t gold from 41.9m in drill-hole BN759
·; 1.7m @ 3.81 g/t gold from 8.3m in drill-hole BN782
·; 0.7m @ 13.6 g/t gold from 22.2m and
·; 0.6m @ 9.1 g/t gold from 32.3m in drill-hole BN817
Mararoa reef drilling:
·; 0.2m @ 40.4 g/t gold from 83.9m in drill-hole BN790
·; 0.2m @ 46.1 g/t gold from 26.5m in drill-hole BN791
·; 0.5m @ 15.8 g/t gold from 1.4m in drill-hole BN814
The diamond drill rig from OK Decline was relocated to Bullen Decline at the start of the quarter. Prior to the relocation the rig was drilling Star of Erin reef with significant results received as follows:
·; 1.5m @ 19.6 g/t gold from 183.5m in drill-hole OKD343
Regional Exploration and Mine Development
The Company has conducted a number of programmes this quarter on its development projects.
North Royal Open Pit
The Company has continued to advance the North Royal Open Pit during the quarter. Dewatering continued, although on a restricted basis due to the onset of the winter months, and the pit is currently at 46% dewatered. It is expected that the dewatering rate will accelerate again as the winter rain is evaporated off the lake surface and the daily temperature rises as spring approaches.
Regulatory approval documents for the recommencement of mining at North Royal have been submitted to the various government departments. First round queries have been received, with no major issues, and request for public comment has been advertised. In addition a presentation to the local council has been conducted. At this stage this process is on schedule.
Data from the latest round of drilling has now been compiled and resource estimation is underway. Following the completion of this the next round of pit optimisation will be undertaken. Results are expected within the September Quarter 2010.
Sterilisation drilling will commence on the proposed location of the waste dump during the September Quarter 2010 with a view to having the area finalised by the end of the quarter. Most areas surrounding the North Royal Open Pit are highly prospective for gold mineralisation and as a consequence the Company must ensure that the risk of placing a waste dump on any potential mineralisation is minimised. This work is to be completed in anticipation of open pit commencement in the December Quarter 2010.
Harlequin South - Perch Reef
The Harlequin South surface drilling was undertaken from the surface of Lake Cowan and was intended to achieve three objectives; firstly to test, in conjunction with the Cobbler North programme, the usefulness of a purpose built lake drill rig, secondly whether the Harlequin South and Perch Reef were the same structure and thirdly confirm the confidence of the Harlequin South resource that had been drilled prior to Norseman Gold taking ownership of the project.
Drill rig performance to date has been acceptable and indicates that drilling under the salt lake with this style of rig is achievable.
Drilling to test the area between Harlequin South and Perch Reef has successfully intersected veining that has the characteristics of the reef targeted. The intersection was mineralised although assay results were not significant but suggests that the reef has an extent that is 250 metres greater on strike and 500 metres greater up dip than anticipated. It is expected that follow up drilling to this will be conducted from underground.
The drilling to test the confidence of the Harlequin South resource successfully intersected reef with a number of significant assays returned. These results will be compiled and interpreted during the September 2010 quarter.
Harlequin South significant drilling results have been received as follows;
·; 0.7m @ 26.8 g/t gold from 161.4m in drill-hole HAD080
·; 1.0m @ 22.9 g/t gold from 178.0m in drill-hole HAD084
·; 6.0m @ 1.3 g/t gold from 78.0m in drill-hole HAD086
Cobbler North
Drilling of the Cobbler North prospect was conducted during the quarter. The performance of the lake drill rig was again acceptable and drill results are yet to be received.
Butterfly Deeps
Exploration has commenced drilling an underground target, Butterfly Deeps, at the Bullen Decline. This target is an interpreted high grade shoot down plunge of historic stoping areas in the old Butterfly workings. The programme involves close to 7,000 metres of underground drilling. The target is close to current underground infrastructure and if successful, offers short lead time to production from the Bullen Decline.
Gold Magnetite Project
Recent exploration work at Norseman has indicated that the potential exists within a number of sedimentary iron formation ('SIF') units within the Noganyer Formation to host magnetite rich iron deposits that may be able to be upgraded into a saleable product. The SIF units are in close proximity to the existing Norseman infrastructure, within 10 kilometres of an existing iron ore capable rail line and 170 kilometres from the Esperance Port.
Mapping of the Noganyer Formation SIF units indicate they vary in width from 40 metres to 300 metres depending on structural repetition and have a strike length of over 15 kilometres on nearly contiguous Company tenement holdings.
Results have been received from initial metallurgical test-work on the iron deposits. The test-work involved preliminary grinding and separation studies on two combined magnetite samples, firstly unaltered and secondly sulphide enriched. The samples tested had head grades of over 20% iron and recovered concentrate grades varied from 30% to over 60% iron depending on the grind size. The major deleterious element was silica.
The results have encouraged the Company to continue to the next phase of investigation which involves the potential targeting of mineralised zones that are more amenable to treatment and to investigate particle size to determine the optimum grind size to enhance liberation of the iron.
Further work is also required on treatment options on the sulphide enriched iron, particularly where there are potentially economic gold occurrences such as at Lady Miller which currently contains 58,000 ounces in resource at an average grade of 2.2 g/t gold.
Corporate Review
The Company has appointed a Chief Operating Officer, Don Harper, during the quarter. He is an experienced mining engineer and mine manager who has also operated as a CEO and operational head for a number of mining companies. Mr. Harper has taken responsibility for the operations of Norseman Gold, including direct responsibility for the Norseman Gold Project. Mr. Harper's appointment has further strengthened the Company's management team as the Norseman Gold Project goes through its current growth phase with the commencement of the OK Decline and the development of the North Royal Open Pit.
The Company would also like to announce that it has reluctantly accepted the resignation of David Steinepreis as a non-executive director of Norseman Gold Plc. Mr. Steinepreis has been a director of the Company since its re-admission to the AIM and its subsequent purchase of the Norseman Gold Project. He has been instrumental as both an executive and non-executive director in getting the Company on its current growth path. Mr. Steinepreis leaves the Company to pursue other business interests including his recent appointment as the Managing Director of another AIM listed company.
The coming quarter and the new financial year will see the Company continue to pursue its production growth strategy, with stoping to commence at OK Decline, the third mine, and resource and pit optimisation work continuing on North Royal Open Pit with a view to commencing this mine, as the fourth mine, in the December Quarter 2010.
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.
Significant results for drill-hole intercepts contained in this report are considered significant because the grade by width total is equal to or greater than 5.0 gram metres per tonne. That is if the intercept is 1.0 g/t gold over 5.0 m, 5.0 g/t gold over 1.0 m, 50 g/t gold over 0.1 m etc it is considered significant.
Quoted resources and reserves are as per the Company's market release of 30 June 2009 and as tabulated below. A revised upgraded Resource and Reserve as at 31 March 2010 is expected to be released shortly.
March 2009 Open Pit & Underground Resource and Reserve Summary
|
Summary for Norseman |
Open Pit - 31 Mar 2009 |
Underground - 31 Mar 2009 |
Total |
||||||
|
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
|
|
Reserve - Proved |
2,000 |
2.0 |
130 |
7,400 |
8.8 |
2,100 |
9,400 |
7.3 |
2,200 |
|
Reserve - Probable |
440,000 |
3.2 |
45,000 |
1,000,000 |
10.9 |
350,000 |
1,400,000 |
8.9 |
400,000 |
|
Total Reserve |
440,000 |
3.2 |
45,000 |
1,000,000 |
10.9 |
350,000 |
1,400,000 |
8.9 |
400,000 |
|
Resource - Measured |
5,000,000 |
0.7 |
110,000 |
130,000 |
5.7 |
24,000 |
5,100,000 |
0.8 |
130,000 |
|
Resource - Indicated |
3,200,000 |
2.4 |
250,000 |
2,100,000 |
13.5 |
910,000 |
5,300,000 |
7.0 |
1,200,000 |
|
Resource - Inferred |
4,200,000 |
5.7 |
770,000 |
6,200,000 |
8.0 |
1,600,000 |
10,000,000 |
7.5 |
2,400,000 |
|
Total Resource |
12,000,000 |
2.8 |
1,100,000 |
8,400,000 |
9.3 |
2,500,000 |
20,000,000 |
5.5 |
3,700,000 |
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.
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
Nandita Sahgal Seymour Pierce Ltd Tel: 020 7107 8000
Jeremy Stephenson Seymour Pierce Ltd Tel: 020 7107 8000
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 three high-grade narrow-vein underground mines - the Bullen, the Harlequin and the OK Declines. 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 fourth and subsequent mines. The Company has fifteen advanced resource projects under review of which three 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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