29th Apr 2010 10:05
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 31 March 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 31 March 2010.
|
Overview |
|
3 Months to 31/03/10 |
3 Months to 31/12/09 |
|
Production |
oz |
14,114 |
15,721 |
|
Average Realised Gold Price |
A$/oz |
1,224 |
1,203 |
|
Operating Cash Cost |
A$/oz |
990 |
933 |
|
Project EBIT |
A$(m) |
0.7 |
1.2 |
|
Capital Investment |
A$(m) |
8.6 |
11.5 |
|
Cash at Quarter End (incl. bullion) |
A$(m) |
21.7 |
24.9 |
|
|
|
|
|
Gold production from the Norseman Gold Project during the three months to 31 March 2010 totalled 14,114 ounces at a cash operating cost of A$990 per ounce gold, generating a profit of A$0.7m.
The Project continued development at its third mine, OK Decline, during the quarter.
Dewatering at North Royal Open Pit has continued and over 41% of the water volume was pumped by the end of the quarter. The second stage drilling programme has been completed at the southern end of the open pit and resource review and pit optimisation is underway.
The Company's capital investment increased 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 initial deep drill-hole to test the continuity of reef between the Harlequin South resource and the Perch Reef resource successfully intersected structure. Assays are pending.
Operating Review
Despite the level of focus on the development of the third mine, gold production from the Norseman Gold Project during the three month period to 31 March 2010 totalled 14,114 ounces. The quarterly production continued in lower grade areas, with the focus remaining on capital development to open up areas for future stoping. For the quarter, the Bullen Decline contributed 5,574 ounces, and the Harlequin Decline contributed 8,304 ounces with 236 ounces from development ore at the OK Decline.
The gold price received during the quarter ranged from A$1,195 to A$1,239 per ounces, with an average price achieved of A$1,224 per ounce. The operations remain un-hedged with a gold price of A$1,248 per ounce at the date hereof.
Production
|
|
|
3 months to 30/06/09
|
3 months to 30/09/09
|
3 months to 31/12/09
|
3 months to 31/03/10
|
|
Capital Development |
metres |
555 |
663 |
767 |
744 |
|
Ore Development |
metres |
1,279 |
1,617 |
1,152 |
1,272 |
|
|
|
|
|
|
|
|
Development |
tonnes |
36,620 |
55,327 |
41,210 |
41,329 |
|
Grade |
gAu/t |
3.40 |
2.26 |
2.98 |
2.28 |
|
|
|
|
|
|
|
|
Mechanised Stoping |
tonnes |
18,114 |
8,018 |
15,967 |
12,193 |
|
Grade |
gAu/t |
4.66 |
2.70 |
2.61 |
2.50 |
|
|
|
|
|
|
|
|
Airleg Stoping |
tonnes |
44,481 |
42,924 |
38,082 |
35,367 |
|
Grade |
gAu/t |
10.73 |
8.61 |
8.75 |
9.15 |
|
|
|
|
|
|
|
|
U/G Production |
tonnes |
99,215 |
106,269 |
95,259 |
88,889 |
|
|
|
|
|
|
|
|
Treated Tonnes |
tonnes |
105,025 |
106,010 |
96,043 |
89,047 |
|
Grade |
gAu/t |
6.66 |
4.86 |
5.21 |
5.05 |
|
Recovery |
% |
98.0% |
97.5% |
97.7% |
97.7% |
|
|
|
|
|
|
|
|
Recovered Ounces |
ozs |
22,013 |
16,160 |
15,721 |
14,114 |
During the March 2010 quarter, the Company continued with its strategy of focussing on capital and ore development to open up stoping areas for production, and completed over two kilometres of underground development for the quarter.
The Bullen Decline has made progress with its capital development during the quarter with the 21 Level of the Bullen orebody now intersected and being developed to the east and west along strike. This level is expected to delineate ore that is amenable to long hole stoping in the future. The capital development has also progressed at the Norseman Incline and is proceeding up to defined blocks on the upper part of the St Patrick's Reef. Diamond drilling continued and is expected to delineate more areas for development and stoping particularly once the second diamond drill rig commences at Bullen towards the end of the June 2010 quarter.
The Bullen Decline production came mainly from the Bullen, Bullen West, Norseman and St Patrick's Reef. Airleg mining was continued in the Bullen West, Norseman and St Patrick's reef, while the Bullen reef was mainly mined by long-hole stoping methods.
The Harlequin Decline accelerated its ore development during the quarter, following the departure of the twin boom jumbo to Bullen after opening up the -312m level. The ore development progress was further enhanced by the movement of one of the Bullen single boom jumbos to Harlequin to assist in completing the Perch Reef development.
The Harlequin Decline progressed on its Perch Reef development as well as work in the HV1 Reef. Redfin/Perch ore development was proceeding on a number of levels to enable the orebody to be fully developed so that mechanised stoping could commence. During the month of March 2010 the mine produced in excess of 21,000 tonnes of ore which is a record since Norseman Gold assumed control of the operations.
The OK Decline continued with its development programme during the quarter with good progress on refurbishment down the decline. Further work was conducted on site infrastructure, with some delays being experienced in obtaining fittings to allow the office/change-rooms/workshops to be commissioned. These works are expected to be completed by the end of the June quarter 2010.
OK Decline ore development continued in, as expected, patchy material at the top of the Star of Erin reef while waste development was completed to access the high grade areas for mining. New ore headings are expected to be opened up into the June quarter 2010 to allow ramping up of production as expected.
Production for the quarter of 14,114 ounces of gold recovered is disappointing but in-line with the Company's revised guidance for the 2009/10 financial year of 65,000 ounces recovered at a cash cost of A$930 from the Bullen and Harlequin Declines.
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 and this increase in production is due to the anticipated increase in production from the OK Decline as it moves out of its development phase and into its production phase.
Operating Costs
As a result of the lower production profile, the net direct cash operating costs per ounce for the quarter have increased to A$990 per ounce of gold recovered. However, as indicated above, the Company expects that its full year forecast costs for the Bullen and Harlequin Declines will be at $930 per ounce mark at the forecast production profile of 65,000 ounces for the financial year.
From an accounting profit and loss point of view, the Norseman Project generated estimated Earnings Before Interest and Tax ('EBIT') of A$0.7 million for the quarter.
Cash Balances
Cash balances at the end of the period totalled A$21.7 million (A$18.8 million excluding bullion). Approximately A$5.5 million of this cash balance is committed to cash-backed environmental bonds.
Capital Expenditure
The major part of the capital expenditure for the quarter was on the equipment and infrastructure for the OK Decline. The new mine took delivery of most of the items needed to start and at the end of the quarter had only installation work to complete.
A total of A$8.6 million in capital was invested during the quarter. Significant capital expenditures were made on mobile equipment (A$1.9 million), exploration (A$2.1 million) and capitalised mine development (A$4.1 million).
Mine Exploration
The exploration results in this quarterly report are limited to those results received after the Operations update released to the AIM/ASX markets on the 10th March 2010.
Diamond drilling at Harlequin during the March 2010 quarter has continued its focus on the Perch Reef. Drilling has continued to produce excellent results and the orebody has still not been closed off by the drilling. At the end of the March 2010 quarter the rig had moved to a location that will enable it to drill the Redfin Reef Footwall. This has been done to enable the Redfin Footwall to be developed as an alternative working area. Once the programme has been completed the drill can return to drilling the strike and depth extent of the Perch Reef.
Perch Reef significant drilling results have been received as follows;
·; 0.2m @ 36.1 g/t gold from 195.0m and in drill-hole HD1817
Diamond drilling at Bullen has continued to make good progress with significant results as outlined below:
Bullen Reef Drilling
·; 0.4m @ 32.1 g/t gold from114.0m in drill-hole BN761
St Patrick's Reef Drilling
·; 3.5m @ 5.4 g/t gold from 176.3m including
o 1.2m @ 12.5 g/t gold from 178.5m in drill-hole BN659
·; 2.2m @ 2.6 g/t gold from 87.5m in drill-hole BN690
Norseman (Mt Barker) Reef Drilling
·; 2.0m @ 11.1 g/t gold from 88.6m in drill-hole BN689
·; 1.2m @ 39.6 g/t gold from 75.8m in drill-hole BN736
·; 4.8m @ 8.4 g/t gold from 84.3m in drill-hole BN737
·; 0.3m @ 22.7 g/t gold from 86.6m in drill-hole BN747
A fourth underground diamond drill rig is expected to be delivered to site by the end of April 2010, and will allow two underground rigs at Bullen, to accelerate the drilling programmes and thereby facilitating the commencement of new working areas as soon as possible.
At OK Decline underground drilling continued into the Star of Erin Reef during the quarter. Results continued to be positive and the drill rig is expected to be in its current location until the end of May 2010, when it will then move higher up at OK decline to test Star of Erin towards the surface. Significant results from the Star of Erin drilling received since the March 2010 Update are as follows;
·; 0.6m @ 549.0 g/t gold from 180.4m and
·; 1.0m @ 5.0 g/t gold from 187.0m in drill-hole OKD337
Regional Exploration and Mine Development
The Company has conducted a number of programmes this quarter on its development projects.
North Royal Open Pit
The dewatering of the North Royal Open Pit continued on during the quarter. The dewatering at the end of the quarter had removed over 41% of the volume of water from the open pit.
To continue to advance the project a second surface drilling programme was undertaken on the southern end of the pit to test the resources that are located to the south of the pit in that area. At quarter end the drill programme had been completed and logging and assaying of the drill-holes was being undertaken. Significant results that have been received so far for the North Royal South drilling are listed below:
·; 1.0m @ 17.5 g/t gold from 24.0m in drill-hole NRRC078
Resource review and pit optimisation will commence during the June 2010 quarter as well as project work to generate the required documents to seek regulatory approval to commence mining of the open pit.
West Crown Reef
A drill programme has been conducted at West Crown during the quarter, with targeted reef structure intersected but containing only low grade gold intersections. Analysis of the data obtained from drilling has delineated further structures that have the potential to host high grade within the reef. These further targets will be scheduled to be explored in the next financial year.
Harlequin South - Perch Reef
The deep drill-hole targeting the Harlequin area between the Harlequin South resource and the Perch underground resource has intersected reef structure at the target depth. The hole has been logged and assays results for the intersections are still pending. Further drilling has continued on the shallower sections of the Harlequin South resources and results and any significant assays will be released on completion. The drill-hole was completed by a specialist lake rig and successfully tested the concept regarding the continuity of the reef between these two resources. The remainder of the programme is currently being drilled and once completed and the results analysed it is expected that further work will be planned.
Cobbler North
Drilling of this prospect is to be conducted following the drilling at Harlequin South.
Gold Magnetite Project
The drilling of two metallurgical holes is currently being undertaken in the Bon Accord area of the Company's SIF geology. The material from these holes will be used to undertake more detailed tests of the, metallurgy of the Company's gold iron deposits to determine whether a saleable iron product can be obtained from the SIF magnetite.
Samples have already been obtained from previously drilled holes into Lady Miller area SIF to conduct further test work on material that contains more sulphides in the gold mineralised zones.
Corporate Review
The Company continues to monitor the performance of its operating declines and is confident that Bullen will eventually return to its targeted production profile, that Harlequin will maintain its current profile and that OK will begin its production phase as its development programme matures. The improvement of the declines, with the ongoing development strategy for North Royal Open Pit, maintains the confidence that the Phoenix Treatment plant will be at capacity sometime during the 2010/11 financial year.
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.
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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