12th Sep 2007 07:01
Norseman Gold PLC12 September 2007 Norseman Gold plc / Epic: NGL / Index: AIM / Sector: Mining & Exploration 12 September 2007 NORSEMAN GOLD PLC ("Norseman Gold" or the "Company") Three Month Report On Activities For The Period Ended 31 July 2007 Norseman Gold plc, the AIM listed Australian gold production company, is pleasedto announce a three month progress report on its activities for the period to 31July 2007. These represent the first full quarter of results since the Companytook over operations of the Norseman Gold Mine in Western Australia, thecountry's longest running producing gold mine. Highlights • Production totalled 23,394 ounces for first three months of operation under new management • Capital development recommenced at the Harlequin underground mine to access new stoping levels • Underground diamond drilling recommenced with significant intercepts from drilling at the Norseman/St Patrick's Reef: • 0.40m @ 8.86g/t gold • 0.40m @ 24.68g/t gold • 0.50m @ 19.03 g/t gold • Two regional exploration programmes commencing shortly on the Norseman Gold leases targeting known mineralised gold zones • Cost cutting programmes initiated to lower future cost of production • Updating of the underground machinery has commenced, with tenders totalling in excess of A$10 million being submitted by various manufacturers for the supply of equipment Norseman Executive Director David Steinepreis said, "We are aggressivelyimplementing programmes to increase both production and efficiency at the mineas well as the JORC compliant reserves and resources. To this end, in our firstthree full months as operator of, we have made significant progress on allfronts. Not only are we negotiating better terms with suppliers, updatingmachinery and building a highly competent work force, but we are also makingnotable advances towards increasing our gold resource through explorationprogrammes. We believe we have the team and expertise to increase theprofitability of the mine and achieve our objectives of extending the mine lifeand building production levels to in the region of 100,000 ounces per annum by30 June 2008 and increasing to 150,000 ounces per annum by 30 June 2010." Operations Norseman Gold assumed control of the operations of the Norseman Gold Mine on 30April 2007 and much progress has already been made. Table 1 below shows theproduction performance for the operations from May 2007 through to July 2007. TABLE 1 May 2007 June 2007 July 2007 TotalCapital Development m 124 158 87 245Ore Development m 352 398 372 1,122Development t 12,640 10,533 9,860 33,033Grade gAu/t 3.92 6.44 4.74 4.97Mechanised Stoping t 1,352 2,011 804 4,167Grade gAu/t 3.41 4.05 8.52 4.70Airleg Stoping t 18,321 14,827 16,736 49,884Grade gAu/t 8.44 11.19 9.53 9.62U/G Production t 32,313 27,371 27,400 87,084Treated Tonnes t 42,747 40,227 45,028 128,002Grade gAu/t 4.95 6.83 5.97 5.90Recovery % 95.3% 96.4% 97.3% 96.4%Recovered Ounces ozs 6,478 8,516 8,400 23,394 Table 2 below shows the tonnes mined and ounces produced on a quarterly basisfrom the quarter ending December 2005 and demonstrates the increases inproduction that have been achieved from the Company's two underground mines,Harlequin and Bullen. It is anticipated that this steady increase in productionwill continue under the current schedules. TABLE 2 Q2 Q3 Q4 Q1 Q2 Q3 3 months Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 to Jul-07* Underground 51,976 49,991 61,796 73,008 83,128 76,575 87,084TonnesUnderground 15,366 16,507 17,626 16,586 18,955 20,896 23,394Ounces * Quarter when Norseman Operations under the control of Norseman Gold. A major focus during the quarter was on capital development at the mines, anarea which was neglected during the period of administration. At Bullen, a major programme was completed in the Norseman Incline to allowaccess to the next two levels of the Norseman Reef and to access the NorsemanVent Raise, which enabled the next section of the primary ventilation circuit tobe established. At Harlequin, capital development was restarted to decline down to the nextthree levels of the Redfin Reef. It is expected that the first new level will beaccessed in the coming quarter. Ore development at Bullen focused on the Norseman Reef, particularly thein-stope ramp to the -330m Level which is the deepest part of the Norseman Reefaccessed in this area to date. Development of the St Patrick's Reef alsocontinued down dip to the -333m Level, again the deepest part of the Reefaccessed to date. Ore development was also conducted to a lesser extent in theBullen West Reef and the Mararoa Reef to expose ore for mining that is currentlyoutside of the Company's JORC reserve envelope. Ore development at Harlequin focussed on re-establishing and completing thoselevels at the Marlin Reef that had been stopped by the Administrator. At the endof the quarter, two levels of the Marlin Reef had been completed both witheconomic grade runs of reef developed. The operations, like the rest of the industry, have had issues attractingquality experienced workers for the underground operations. Notwithstandingthis, the employment of experienced underground personnel continued during thequarter, particularly air-leg miners, to enable the stope production targets tobe met. In addition, training of inexperienced workers has been a focus of thesite and this will provide the workforce that is required to be efficient andproductive in the future. Costs were greater than expected due to increases in labour costs and increasedmaintenance and hire costs as company owned equipment was taken out of servicefor major maintenance. The Company, as previously advised, is still budgetingapprox A$500 operating cash costs per ounce for the year to 30 June 2008. The proposal for the generation of power using gas was advanced, withnegotiations being undertaken with various gas suppliers and pipeline owners forfuel supply. It is anticipated that agreements should be ready for execution andequipment orders placed in the coming quarter. Fleet replacement tenders, totalling over A$10 million, have been sent to therelevant manufacturers and the tender analysis and the placement of the firstorders for available underground machinery are expected in the coming quarter. The process of negotiating competitive pricing with major suppliers has beenongoing since the Company took control of the operations with some success. Mine Exploration Diamond drilling at Bullen recommenced during the quarter following a six-monthsuspension. The initial drilling programmes are intended to target the StPatrick's Norseman area to the south of the main workings, the Norseman Reefadjacent to the Mt Barker Fault and the Mararoa Reef. Initial intercepts from the first round of underground diamond drilling atBullen are contained in Table 3 below. TABLE 3 : Norseman Underground Diamond DrillingSignificant Drilling InterceptsProspect St PatricksProject NorsemanHole Number Northing Easting mRL Grid Az. Dip Hole Depth Intercept BN426 2333 999 -305 66 -50 140.0 0.10m @ 0.18g/t gold from 109.75m BN436 2333 999 -305 41 -33 164.2 0.40m @ 8.86g/t gold from 135.15m (HW) 0.40m @ 24.68g/t gold from 145.75m BN451 2326 998 -305 221 -23 158.4 0.60m @ 0.38g/t gold from 55.50m (NM01) BN452 2326 998 -305 221 -13 191.3 0.25m @ 3.01g/t gold from 93.60m (NM01) 3.90m @ 3.73 g/t gold from 140.95m (SP01) BN453 2326 998 -305 194 -25 249.0 0.50m @ 19.03 g/t gold from 73.55m (NM01) 2.40m @ 4.54g/t gold from 201.40m (SP01) BN454 2326 998 -305 183 -23 312.0 0.30m @ 3.38g/t gold from 301.6m (SP01) 0.50m @ 0.17g/t gold from 109.75m (NM01) BN456 2617 1036 -308 348 0 200.0 0.10m @ 0.17g/t gold from 179.9m 0.15m @ 0.12g/t gold from 189.8m Note: Assay results are for 1/2 core LTK48 core size. Assay results KalAssayLaboratories, Leachwell method. There is a well publicised worldwide delay with assaying turnaround, which isalso affecting Norseman. This naturally does not affect operations but doesaffect the timely reporting of the results once any particular hole iscompleted. At Harlequin there were problems with the drill rig, however these have beenrectified and the rig has recommenced drilling into the Marlin Reef Extensions,after which it will move to the Redfin Reef drilling under the current designedlevels. Regional Exploration The Company has approved the first two programmes of surface exploration forNorseman Gold on the Norseman leases. The first programme is designed to test potential resource blocks above the oldunderground workings of the Mararoa Reef as well as the previously identifiedpotential for a Mararoa Footwall Reef. The 2,500 m drill programme is an equalmix of RC and diamond drilling. The second programme is targeting the trends of the mineralisation between, andto the south of, the previously mined North Royal Open Pits. A review ofgeological sections has identified targets for drilling with potential for pitcutbacks and extensions. The 2,000 m programme will be all RC drilling. First results are expected in the December quarter. Corporate The gold price received during the three months to 31 July 2007 ranged betweenA$764 per ounce and A$833 per ounce with an average price received of A$783 perounce. The Company currently has no gold hedging in place. Cash at bank and gold bullion on hand at the end of July 2007 was A$20.3million. Summary & Outlook Norseman's operations continue to target production of 8,000 ounces of gold permonth. At the underground mines, production will start to benefit from the developmentwork that has been undertaken during the quarter, and it is expected that theproduction profile will increase and achieve a consistency on a month-to-monthbasis. At the Harlequin Mine, the focus is on the opening up of levels viadevelopment, in particularly on the Redfin Reef. It is expected that the nextRedfin Reef level will be accessed by capital development in the middle of theSeptember quarter. It is anticipated that contracts for the generation of gas power and the supplyof underground mobile equipment will be finalised in the September quarter withequipment deliveries on an availability basis completed by the March 2008quarter. The upgrading of the current fleet, which has had significantavailability issues, will result in production efficiencies and a lower cashcost of production. Competent Persons - Consent for Release The information in this report is based on data generated by employees ofCentral Norseman Gold Corporation who have the relevant experience andqualifications to qualify as competent persons. The report was compiled by Barry Cahill using that data. He is a Member of theAustralasian Institute of Mining and Metallurgy and has sufficient experiencewhich is relevant to the style of mineralisation and type of deposit underconsideration and to the activity which they are undertaking to qualify as aCompetent Person as defined in the 2004 Edition of the "Australasian Code forReporting of Exploration Results, Mineral Resources and Ore Reserves". He hasconsented to the inclusion in the report of the matters based on thisinformation in the form and context in which it appears. * * ENDS * * For further information visit www.norsemangoldplc.com or contact: David Steinepreis Norseman Gold Plc Tel: 61 (0) 89 420 9300Romil Patel Blue Oar Securities Plc Tel: 020 7448 4400Guy Wilkes Ocean Equities Ltd Tel: 020 7786 4370Hugo de Salis St Brides Media & Finance Ltd Tel: 020 7242 4477 Note to editors: Norseman Gold plc is an AIM listed Australian gold production company, whichrecently acquired the Norseman Gold Project; Australia's longest continuallyrunning gold operation. The Norseman Gold Project is located in the EasternGoldfields of Western Australia in the highly prospective Norseman-Wilunagreenstone 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 ithas produced over 5.5 million ounces of gold. The mine is producing at a rateof around 100,000 ounces per annum, sourced from two high-grade narrow-veinunderground mines - the Bullen and the Harlequin. Currently, it has a TotalResource inventory of 1.9 million ounces of gold at a grade of 4.1 g/t. The tenements cover a 687 sq km area centred on the Norseman Township. Thelandholding comprises 146 contiguous tenements consisting of 10 ExplorationLicences, 102 Mining Licences, 20 Prospecting Licences, 14 MiscellaneousLicences and 29 Mining Lease Applications. The Company's strategy is focused on extending the mine life through theconversion of resources into reserves and identifying additional resources. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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