30th Oct 2009 07:23
Norseman Gold plc / Epic: NGL / Index: AIM / Sector: Mining & Exploration
Final
NORSEMAN GOLD PLC
('Norseman Gold' or the 'Company')
Three Month Report On Activities For The Period Ended 30 September 2009
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 September 2009.
|
Overview |
3 Months to 30/09/09 |
3 Months to 30/06/09 |
|
|
Production |
oz |
16,160 |
22,013 |
|
Average Realised Gold Price |
A$/oz |
1,150 |
1,216 |
|
Operating Cash Cost |
A$/oz |
900 |
636 |
|
Project EBIT |
A$(m) |
0.3 |
8.5 |
|
Capital Investment |
A$(m) |
6.6 |
5.6 |
|
Cash at Quarter End (incl. bullion) |
A$(m) |
31.8 |
35.3 |
The Norseman Gold Project achieved record capital development and ore development metres for the September 2009 quarter with development tonnes up over 50% quarter on quarter. This performance reflected the strategy of developing to open up future working areas to create flexibility in the working declines, and the expectation is that this will support forecast production in the upcoming quarters.
The Company continued with its capital investment during the quarter spending A$6.6M on exploration, capitalised mine development and equipment.
Gold production from the Norseman Gold Project during the three months to 30 September 2009 totalled 16,160 ounces at a cash operating cost of A$900 per ounce gold. The production was lower than forecast for the quarter due to the increase in development as the declines sought to access higher grade blocks for future stoping later in the financial year.
Underground drilling at Harlequin continues to return excellent results from the drilling of the Perch Reef. The potential of the reef has now opened up to a strike of 380 metres and a dip extent of 150 metres.
The Company has approved the commencement of the OK Decline and as a consequence 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 a 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.
Operating Review
Gold production from the Norseman Gold Project during the three month period to 30 September 2009 totalled 16,160 ounces. The quarterly production was affected by the focus on development to allow access to stoping areas for the rest of the financial year to the extent that capital and ore development metres were the best achieved for a quarter since the Company commenced at Norseman, and the stoping of lower grade areas. For the quarter, the Bullen mine contributed 8,755 ounces, and the Harlequin mine contributed 7,405 ounces.
The gold price received during the quarter ranged from A$1,130 to A$1,178 per ounce, with an average price achieved of A$1,150 per ounce. The operations remain un-hedged with a gold price of A$1,140 per ounce at the date hereof.
Production
|
|
|
3 months to 31/12/08 |
3 months to 31/03/09 |
3 months to 30/06/09 |
3 months to 30/09/09 |
|
Capital Development |
metres |
508 |
590 |
555 |
663 |
|
Ore Development |
metres |
1,260 |
1,212 |
1,279 |
1,617 |
|
Development |
tonnes |
38,652 |
39,876 |
36,620 |
55,327 |
|
Grade |
gAu/t |
4.39 |
2.50 |
3.40 |
2.26 |
|
Mechanised Stoping |
tonnes |
7,569 |
15,174 |
18,114 |
8,018 |
|
Grade |
gAu/t |
3.64 |
4.19 |
4.66 |
2.70 |
|
Airleg Stoping |
tonnes |
52,250 |
48,665 |
44,481 |
42,924 |
|
Grade |
gAu/t |
8.06 |
9.63 |
10.73 |
8.61 |
|
U/G Production |
tonnes |
98,471 |
103,715 |
99,215 |
106,269 |
|
Treated Tonnes |
tonnes |
105,507 |
102,217 |
105,025 |
106,010 |
|
Grade |
gAu/t |
5.94 |
6.12 |
6.66 |
4.86 |
|
Recovery |
% |
98.3% |
98.9% |
98.0% |
97.5% |
|
Recovered Ounces |
ozs |
19,831 |
19,902 |
22,013 |
16,160 |
During the September 2009 quarter, the Company focussed on maximising capital and ore development. This is to ensure access to drill positions to enable the timely drilling of new resources and reserves (particularly in newer areas such as the Perch Reef at Harlequin), for capital development to access new areas for ore development, and for the ore development to open up the next areas for stoping. In total, in excess of 600 metres of capital development and 1,600 metres of ore development have been completed for the quarter, both records for the Project since the Company acquired the Norseman operations. As a consequence total ore development tonnes of 55,327 tonnes were also a record since Norseman took control of the project.
Production for the quarter was 16,160 ounces of gold recovered for the quarter, below the Company's target of producing 6,500 ounces per month, largely as a result of the lower grade development ore processed through the treatment plant. The Company is confident that the first quarter short fall from the Bullen and Harlequin Declines will be made up over the next three quarters of this financial year and as such the Company reiterates its production and cash cost guidance from the Bullen and Harlequin Declines.
Operating Costs
As a result of the lower production profile, the net direct cash operating costs per ounce for the quarter increased to A$900 per ounce of gold recovered, above the forecast range of between A$720 to A$780 per ounce. However the Company expects that it will achieve its full year forecast costs for the Bullen and Harlequin Declines as the production profile returns back up to the expected levels. Total operating costs have been maintained at close to budgeted levels.
From an accounting profit and loss point of view, the Norseman Project generated Earnings Before Interest and Tax ('EBIT') of A$0.3 million for the quarter.
Cash Balances
Cash balances at the end of the period totalled A$31.8 million (A$29.5 million excluding bullion). Approximately A$5.5 million of this cash balance is committed to cash-backed environmental bonds.
Capital Expenditure
In anticipation of the development of the third mine, the Company placed a major equipment order in June 2009. The order includes a second two boom jumbo, a third diamond drill, three large underground loaders and a new underground truck. The entire order has been financed by the equipment vendor over 36 months and represents a further investment of over A$8m in the development of the Norseman operations.
The Company took delivery of the two boom jumbo in the last weeks of September. The machine has been successfully commissioned and is now programmed to undertake the refurbishment and capital development work required at the OK Decline. This will allow the current jumbo to focus on the development of the orebodies at the Bullen and Harlequin Declines. The Company has also taken delivery of the third diamond drill rig in the first week of October which has gone into Bullen Decline to commence drilling the resource targets on the Norseman and St Patricks Reef. The underground truck is due to be delivered in November 2009 and the underground loaders in April and May 2010.
The Company has also ordered 10 accommodation buildings of 4 rooms each to be used in the upgrade and expansion of the current single persons camp. This expansion is to allow sufficient accommodation to be available to house the additional operators that will be required when mining at the OK Decline commences.
A total of A$6.6 million in capital was invested during the quarter, mostly funded from cashflow. Significant capital expenditures from cash flow were made on exploration (A$1.5 million) and capitalised mine development (A$2.0 million).
Mine Production
The two boom jumbo was undertaking capital development at the Harlequin Decline and completed to the next levels at the Redfin and HV1 Reefs. Ore development rates were excellent, with the Harlequin ore development focussing on the Redfin Reef and the HV5B West Reef.
The Bullen ore development focussed on the Bullen, Norseman and St Patrick's Reefs.
Diamond drilling is continuing at Harlequin in the Redfin and Perch Reef, while the new diamond drill rig has gone to Bullen Decline and is focussing on the drilling of the St Patrick's and Norseman Reef.
The Company's objective at both Bullen and Harlequin is to maintain the production at a consistent level while continuing to seek more efficiencies.
Mine Exploration
Diamond drilling at Harlequin has been focussed on the HV6 and Harlequin South structures while the development of the Redfin/Perch diamond drill cuddy on the 285m Level was completed.
Significant results have been received as follows;
1.1m @ 85.5 g/t gold from 152.6m in drill-hole HD1806A
0.3m @ 44.5 g/t gold from 102.0m in drill-hole HD1815
The diamond drill has now moved to the completed cuddy on the Redfin 285m Level and has drilled a number of holes that have intersected the Perch Reef, some containing visible gold.
Significant results have been received as follows;
0.6m @ 21.2 g/t gold from 56.9m in drill-hole HD1771
0.7m @ 41.3 g/t gold from 30.4m in drill-hole HD1774
1.1m @ 26.5 g/t gold from 83.5m in drill-hole HD1777
3.0m @ 23.9 g/t gold from 143.5m and
0.9m @ 136.0 g/t (uncut) from 151.0m in drill-hole HD1782
These intersections, combined with intersections containing visible gold for which assays are still outstanding, have now delineated a potential strike of 380 metres and a dip extent of 150 metres for the Perch Reef. The drilling of this reef will continue through the December 2009 quarter.
Diamond drilling at Bullen has resumed with the arrival and commissioning of the new diamond drill rig in the first week of October. The rig has drilled good metres since commissioning and first results from this drilling are expected to be released with the December 2009 quarterly report.
Readers are advised to go to www.norsemangoldplc.com to view diagrams of the Perch Reef and Redfin Reef including the location of intercepts.
Regional Exploration and Third Mine Development
The Company has already announced the successful completion of the study and approval to commence the development of its third underground mine, the OK Decline. This is the result of the successful exploration and development effort as the Company has pursued the strategy of filling the treatment plant.
The focus is now on ensuring that OK Decline completes a smooth transition to become a long term producing decline for the operations and then advancing the fourth mine, the North Royal open pit, to a more advanced stage ready for approval to commence.
The Company has previously announced that the dewatering of the North Royal open pit has commenced.
Norseman Iron Ore
The work on the Norseman magnetite has seen little progress during the September quarter due to the exploration team's focus on the drilling of the projects as part of the third mine strategy.
The Company has now appointed a Principal Metallurgist to its corporate office and part of the role will be to initially pursue treatment options for the magnetite that would be mined as a by-product of mining gold ores in the SIF units.
Tailings Retreatment
There has been little progress on the tailings retreatment project while the drilling programmes, which are part of the third mine strategy, are underway. When resources are available, the Company intends to examine the use of the tailings as fill for underground pillar extraction in the historic underground workings in the upper levels of its mines.
As previously mentioned, the Company has now appointed a Principal Metallurgist to its corporate office and part of the role will be to initially pursue options for the retreatment of tailings and the use of tailings as fill for the mining of historical pillars underground.
Corporate Review
The Company has relocated a senior manager from site to the corporate office to commence as the Principal Metallurgist. The role will encompass aspects of the project development work of the third, fourth and subsequent mines, as well as addressing long term treatment plant scenarios, tailings retreatment and magnetite metallurgy. This appointment is an important step for the business it moves into and beyond its strategy to fill the treatment plant.
The Company continues to monitor the region for corporate opportunities to add further to shareholder value.
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 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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