TIDMNGL
RNS Number : 0802V
Norseman Gold PLC
27 October 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 30 September 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 30 September 2010.
+------------------------------+-------+--------------+--------------+
| Overview | | 3 Months to | 3 Months to |
| | | 30/09/10 | 30/06/10 |
+------------------------------+-------+--------------+--------------+
| Production | oz | 12,229 | 14,469 |
+------------------------------+-------+--------------+--------------+
| Average Realised Gold Price |A$/oz | 1,356 | 1,343 |
+------------------------------+-------+--------------+--------------+
| Operating Cash Cost |A$/oz | 1,041 | 943 |
+------------------------------+-------+--------------+--------------+
| Project EBIT |A$(m) | (1.1) | 0.8 |
+------------------------------+-------+--------------+--------------+
| Capital Investment |A$(m) | 6.8 | 8.6 |
+------------------------------+-------+--------------+--------------+
| Cash at Quarter End (incl. |A$(m) | 10.9 | 16.7 |
| bullion) | | | |
+------------------------------+-------+--------------+--------------+
| | | | |
+------------------------------+-------+--------------+--------------+
Gold production from the Norseman Gold Project during the three months to 30
September 2010 totalled 12,229 ounces at a cash operating cost of A$1,041 per
ounce gold, generating a Project EBIT of (A$1.1M).
The company achieved record total underground development of 2,315 metres during
the quarter as the Company continues its focus on opening up more working areas
to improve its production performance.
OK Decline is expected to generate production ore from stoping this month.
Dewatering at North Royal Open Pit has continued and 63% of the water volume has
been pumped. The Company is to submit the final documents required for
regulatory approval and is confident of receiving final approvals for the
development.
The Company's capital investment programme continued during the quarter with the
development of the OK Decline resulting in expenditure of A$6.8M on exploration,
capitalised mine development and equipment.
Capital raising successfully undertaken, raising GBP11.25 million for the
development of the North Royal Open Pit, with the issue of 25 million shares at
45 pence.
Operating Review
Gold production from the Norseman Gold Project during the three month period to
30 September 2010 totalled 12,229 ounces, which is well below target but in line
with the Company's expectations. The Company continued to develop the
underground declines at an acceptable rate but unfortunately overall production
was affected by a serious accident during the quarter. For the quarter, the
Bullen Decline contributed 2,485 ounces, and the Harlequin Decline contributed
8,872 ounces with 425 ounces from development ore at the OK Decline. The
remaining 447 ounces came from the treatment of low grade stockpiles.
The gold price received during the quarter ranged from A$1,295 to A$1,418 per
ounce, with an average price achieved of A$1,354 per ounce. As a result of the
lower production profile, the net direct cash operating costs per ounce for the
quarter were A$1,041 per ounce of gold recovered. The operations remain
un-hedged with a gold price of approximately A$1,366 per ounce at present.
Production
+-----------------+--------+----------+----------+----------+----------+
| | | 3 | 3 | 3 | 3 |
| | | months | months | months | months |
| | | to | to | to | to |
| | |31/12/09 |31/03/10 |30/06/10 |30/09/10 |
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Capital |Metres | 767 | 744 | 415 | 628 |
| Development | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Ore Development |Metres | 1,152 | 1,272 | 1,682 | 1,687 |
+-----------------+--------+----------+----------+----------+----------+
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Development |Tonnes | 41,210 | 41,329 | 46,622 | 51,793 |
+-----------------+--------+----------+----------+----------+----------+
| Grade | gAu/t | 2.98 | 2.28 | 2.69 | 3.62 |
+-----------------+--------+----------+----------+----------+----------+
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Mechanised |Tonnes | 15,967 | 12,193 | 11,770 | 4,261 |
| Stoping | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Grade | gAu/t | 2.61 | 2.50 | 1.80 | 3.14 |
+-----------------+--------+----------+----------+----------+----------+
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Airleg Stoping |Tonnes | 38,082 | 35,367 | 30,145 | 21,767 |
+-----------------+--------+----------+----------+----------+----------+
| Grade | gAu/t | 8.75 | 9.15 | 10.55 | 8.60 |
+-----------------+--------+----------+----------+----------+----------+
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| U/G Production |tonnes | 95,259 | 88,889 | 88,537 | 77,821 |
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Treated Tonnes |Tonnes | 96,043 | 89,047 | 89,015 | 92,345 |
+-----------------+--------+----------+----------+----------+----------+
| Grade | gAu/t | 5.21 | 5.05 | 5.23 | 4.20 |
+-----------------+--------+----------+----------+----------+----------+
| Recovery | % | 97.7% | 97.7% | 96.7% | 98.1% |
+-----------------+--------+----------+----------+----------+----------+
| | | | | | |
+-----------------+--------+----------+----------+----------+----------+
| Recovered | Ozs | 15,721 | 14,114 | 14,469 | 12,229 |
| Ounces | | | | | |
+-----------------+--------+----------+----------+----------+----------+
The Company continued to pursue its development programme with the operations
achieving 2,315 metres of capital and ore development during the September 2010
quarter, which is the best quarterly advance since the Company took control of
the Norseman Gold Project in 2007. The continued development progress at the
Norseman Gold Project should lead to an improved production performance from the
three underground declines, as new production areas are made available for
stoping in the future.
Capital development at Bullen continued in the Norseman Incline where it
accessed the upper portion of the high grade St Patrick's reef in the middle of
the quarter. Capital development also commenced in the Bullen Decline to access
the high grade O'Brien's Reef. Ore development continued on the Bullen 2100
level and in the newly exposed upper St Patrick's reef where development grades
were as expected.
The Harlequin Decline continued to perform to expectations during the quarter.
Ore development concentrated on the Redfin-Perch reef to open up blocks for
airleg and mechanised stoping.
Capital development at OK Decline returned to new decline development following
the completion of the refurbishment of the old decline. The development rates
continue to improve and this month there were three ore headings opened up for
development.
Stope preparation has commenced and the first of the stoping ore from OK Decline
is expected in October 2010. Once stoping commences it is expected that the
production profile will steadily increase up to the planned profile.
Overall, production for the quarter delivered 12,229 ounces of gold recovered.
This is well below target but in line with Company expectations during what has
been a difficult quarter following a serious accident at the OK Decline in
August 2010, when a worker was fatally injured.
Production Outlook
The Company has continued its efforts to improve its production profile and
expects to see an improved performance in the December 2010 quarter. The
production 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.
This forecast is based on increasing the production profile at the mining
operation as part of the "fill the mill" strategy. The Company is committed to
this strategy and has made significant progress in the development of the OK
Decline and on the North Royal Open Pit, which it is anticipated will commence
in the December Quarter 2010.
Operating Costs
As a result of the lower production profile, the net direct cash operating costs
per ounce for the quarter were A$1,041 per ounce of gold recovered and the
Norseman Gold Project generated Earnings Before Interest and Tax ('EBIT') of
(A$1.1) million for the quarter. The Norseman Gold Project EBIT does not
include the corporate costs of Norseman Gold Plc.
Cash Balances
Cash balances at the end of the period totalled A$10.9 million (A$8.7 million
excluding bullion). Approximately A$5.5 million of this cash balance is
committed to cash-backed environmental bonds. The cash balance is as at the end
of the September 2010 quarter and does not include the proceeds of the capital
raising that was completed in October 2010.
Capital Expenditure
Capital expenditure continued to be focussed around the development of the OK
Decline. Expenditure was also committed to drilling and pre-development work at
the North Royal Open Pit.
A total of A$6.8 million in capital was invested during the September 2010
quarter. Significant capital expenditures made during the quarter were on
mobile equipment (A$0.5 million), exploration (A$1.7 million) and capitalised
mine development (A$4.0 million).
Mine Exploration
Diamond drilling at Bullen has continued to make good progress with the focus on
increasing resources around the currently active workings. Drilling continued
to test St Patrick's reef, Mararoa reef and Esperanto reef with significant
results as outlined below.
St Patrick's reef drilling:
· 1.3m @ 6.0 g/t from 109.6m in drill-hole BN691
· 0.4m @ 146.5 g/t gold from 17.9m and
· 0.7m @ 7.9 g/t gold from 21.0m in drill-hole BN838
· 2.5m @ 3.4 g/t gold from 34.5m including
o 0.5m @ 15.2 g/t gold from 36.5m in drill-hole BN839
Mararoa reef drilling:
· 0.5m @ 25.0 g/t gold from 0.6m in drill-hole BN815
Esperanto reef drilling:
· 1.5m @ 7.1 g/t gold from 365.1m in drill-hole BN826
Harlequin drilling continued to focus on targets that might provide another work
area away from the current concentration around the Redfin-Perch reef. Drilling
was conducted on potential extensions to the HV1 North and drilling into the
HV10. Drilling continues into these targets as at the end of the September 2010
quarter.
The OK Decline diamond drill rig returned from the Bullen Decline in September
2010 and commenced drilling from Stockpile #2 off the OK Decline. The initial
drilling programme is to target the Star of Erin reef along strike from the
current proposed working areas. The Star of Erin reef was intersected as
expected with significant results received as follows:
· 1.6m @ 7.7 g/t gold from 23.0m in drill-hole OKD275
· 1.3m @ 54.6 g/t gold from 285.5m in drill-hole OKD276
· 3.3m @ 2.4 g/t gold from 278.3m in drill-hole OKD277
· 0.7m @ 17.3 g/t gold from 122.7m in drill-hole OKD362
Drilling continues from this location and the results will be analysed once the
programme is finished.
Regional Exploration and Mine Development
The main focus for the exploration and developments efforts of the Company
during the September 2010 quarter was to continue to ensure that the development
of the North Royal open pit proceeded in a timely manner. In addition work
continued on the previously reported drill programme at Butterfly Deeps.
North Royal Open Pit
The Company has continued to advance the North Royal Open Pit during the
quarter.
Dewatering continued and the pit was 57% dewatered at the end of the quarter.
As expected the rate of dewatering has increased with the improvement of the
weather from winter to spring and with the pumps approaching their optimum
pumping characteristics as the pit depth increases. By the middle of October
the pit was 63% dewatered.
Regulatory approval documents for the recommencement of mining at North Royal
are to be submitted to the various government departments with final amendments.
The environmental bond for the mining operation is due to be submitted shortly
and the process remains on schedule.
The tendering for the mining of the open pit has progressed well during the
quarter with a short list generated and contractor review meetings being
conducted. The process is on target for the successful tender to be approved at
the end of October 2010.
The first round in-fill drilling results have been received and the results are
as expected. Follow up drilling will commence shortly to test the Tiara reef,
nearer to the surface and further to the east of the current pit design.
Further in-fill drilling will be conducted as the pit continues to be dewatered.
North Royal open pit drilling results are as follows;
· 2.0m @ 13.4 g/t gold from 36.0m including
o 1.0m @ 22.6 g/t gold from 36.0m and
· 2.0m @ 6.1 g/t from 40.0m including
o 1.0m @ 10.9 g/t gold from 40.0m in drill-hole NRRCSP002
· 2.0m @ 6.1 g/t from 40.0m including
o 1.0m @ 20.0 g/t gold from 11.0m in drill-hole NRRCSP005
· 2.0m @ 9.3 g/t from 80.0m including
o 1.0m @ 16.9 g/t gold from 80.0m in drill-hole NRRCSP009
· 3.0m @ 3.5 g/t from 65.0m including
o 1.0m @ 5.4 g/t gold from 66.0m and
· 6.0m @ 2.0 g/t gold from 132.0m in drill-hole NRRCSP014
· 2.0m @ 3.8 g/t gold from 122.0m in drill-hole NRRCSP015
Sterilisation drilling of the area outlined for the waste dump for the initial
pit operations was completed during the quarter. Intersections were received
from laterite mineralisation that had been previously defined in the south
eastern corner of the area. North Royal sterilisation drilling significant
results are as follows;
· 1.0m @ 15.7 g/t gold from 48.0m in drill-hole NRRC130
· 2.0m @ 10.9 g/t gold from 36.0m including
o 1.0m @ 5.1 g/t gold from 36.0m and
o 1.0m @ 16.7 g/t gold from 37.0m in drill-hole NRRC152
Final documents and presentations are currently being prepared for the North
Royal Open Pit, with final Board approval expected by the end of October 2010.
Butterfly Deeps
Exploration has continued drilling the underground target, Butterfly Deeps, at
the Bullen Decline. This target is an interpreted high grade shoot down plunge
of historic stoping areas in the old Butterfly workings. To date the drilling
has proceeded towards the high grade plunge and although the structure is
mineralised no significant results have been received. It is expected that
grades will potentially improve as the drilling advances towards the interpreted
plunge.
Corporate Review
During the quarter the Company undertook a capital raising to fund the
development of the North Royal Open Pit. The raising resulted in the issue 25
million shares at 45 pence per share to raise GBP11.25 million pounds. The fund
raising was well received, with good support from current and new shareholders,
and was finalised on 4 October 2010.
The Company expects improvements to the production profile in the coming quarter
with the commencement of stoping at OK Decline and then in subsequent quarters
as the OK Decline production continues to increase and the North Royal Open Pit
commences and the first ore tonnes from this mine are treated. It is expected
that with the ore from these two developments the Company's strategy to "fill
the mill" will be realised by the end of the 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.
Quoted resources and reserves are as per the Company's market release of 25
August 2010 and as tabulated below.
TABLE 1: March 2010 Open Pit & Underground Resource and Reserve Summary
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
| Summary | Open Pit - 31 Mar | Underground - 31 | Total |
| for | 2010 | Mar 2010 | |
| Norseman | | | |
+ +--------------------------------+-------------------------------+--------------------------------+
| | Tonnes |Grade | Ounces | Tonnes |Grade | Ounces | Tonnes |Grade | Ounces |
| | | g/t | gold | | g/t | gold | | | gold |
| | | gold | | | gold | | | g/t | |
| | | | | | | | | gold | |
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
| Reserve - | 0 | 0.0 | 0 | 230,000 | 12.0 | 89,000 | 230,000 | 12.0 | 89,000 |
| Proved | | | | | | | | | |
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
| Reserve - | 440,000 | 3.2 | 45,000 | 1,100,000 | 7.9 | 280,000 | 1,500,000 | 6.8 | 330,000 |
| Probable | | | | | | | | | |
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
| Total | 440,000 | 3.2 | 45,000 | 1,300,000 | 8.9 | 370,000 | 1,700,000 | 7.7 | 420,000 |
| Reserve | | | | | | | | | |
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
| Resource | 5,000,000 | 0.7 | 110,000 | 410,000 | 14.4 | 190,000 | 5,400,000 | 1.7 | 300,000 |
| - | | | | | | | | | |
| Measured | | | | | | | | | |
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
| Resource | 3,600,000 | 2.6 | 300,000 | 2,200,000 | 10.9 | 770,000 | 5,800,000 | 5.9 | 1,100,000 |
| - | | | | | | | | | |
| Indicated | | | | | | | | | |
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
| Resource | 4,100,000 | 5.8 | 760,000 | 6,200,000 | 8.0 | 1,600,000 | 10,000,000 | 7.5 | 2,400,000 |
| - | | | | | | | | | |
| Inferred | | | | | | | | | |
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
| Total | 13,000,000 | 2.9 | 1,200,000 | 8,800,000 | 8.9 | 2,600,000 | 21,000,000 | 5.3 | 3,800,000 |
| Resource | | | | | | | | | |
+-----------+------------+-------+-----------+-----------+-------+-----------+------------+-------+-----------+
Notes:
1. As is required the Resources and Reserves are calculated and reported in
accordance with the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves, The JORC Code, 2004 Edition.
2. Resources are inclusive of reserves.
3. Resources and reserves are quoted to two significant figures so
inconsistencies may exist within the table.
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 3.8 million oz
of gold at an average grade of 5.3 g/t.
The tenements cover a 2,180 sq km area centred on the Norseman Township. The
landholding comprises 221 tenements consisting of 16 Exploration Licences, 107
Mining Licences, 64 Prospecting Licences, 15 Miscellaneous Licences, 5
Exploration Licence Applications, 13 Prospecting Licence Applications and 1
Mining Lease Application.
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
MSCLIFFAILLDFII
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