September 2009 Quarterly Report
October 30 2009 - 3:23AM
UK Regulatory
TIDMNGL
RNS Number : 6503B
Norseman Gold PLC
30 October 2009
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 | 3 Months to |
| | | 30/09/09 | 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. |A$(m) | 31.8 | 35.3 |
| bullion) | | | |
+----------------------------------+-------+----------------+----------------+
| | | | |
+----------------------------------+-------+----------------+----------------+
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 | 3 months | 3 months | 3 months |
| | | to | to | to | to |
| | | 31/12/08 | 31/03/09 | 30/06/09 | 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-mailinvestors@ngold.com.au
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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