Quarterly Results
April 29 2010 - 5:05AM
UK Regulatory
TIDMNGL
RNS Number : 0250L
Norseman Gold PLC
29 April 2010
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 | 3 Months to |
| | | 31/03/10 | 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. |A$(m) | 21.7 | 24.9 |
| bullion) | | | |
+------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------+-------+--------------+--------------+
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 | 3 | 3 | 3 |
| | | months | months | months | months |
| | | to | to | to | to |
| | |30/06/09 |30/09/09 |31/12/09 |31/03/10 |
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Capital |metres | 555 | 663 | 767 | 744 |
| Development | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| 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 |tonnes | 18,114 | 8,018 | 15,967 | 12,193 |
| Stoping | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| 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 | ozs | 22,013 | 16,160 | 15,721 | 14,114 |
| Ounces | | | | | |
+-----------------+--------+----------+----------+----------+----------+
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 investors@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
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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