TIDMNGL
RNS Number : 2783L
Norseman Gold PLC
29 July 2011
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 June
2011
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
June 2011.
Overview
-- Mining activities at North Royal Open Pit continued on target
with a stockpile of ore increasing to 32,000 tonnes at 1.9 g/t
gold. The transition from oxide ore to harder transitional ore is
expected to commence in the upcoming quarter.
-- Gold production from the Norseman Gold Project increased by
27% to 15,001 ounces during the three months to 30 June 2011 -
produced at a direct cash operating cost of A$1,081 per ounce gold,
a 38% decrease from the previous quarter, generating a Project EBIT
of (A$1.0M).
-- Cash balances at the end of the period totalled A$11.3
million (A$10.5 million excluding bullion). Approximately A$6.1
million of this cash balance is committed to cash-backed
environmental bonds. As previously announced in the Working Capital
Finance Facility update, released on 4 July 2011, subsequent to
period end the Company closed a A$15m secured working capital
facility agreement with EXP T1 Ltd, a subsidiary of RK Mine Finance
Trust 1, a member of the Red Kite group of Funds ('Red Kite').
-- The Company's review and action plan for its operations has
continued. While initial progress implementing the improvement
strategy has been successful, the process is by no way complete and
it is expected that the production profile will continue to improve
through the 2011/12 financial year. The Company's forecast gold
production for the 2011/12 financial year remains in excess of
100,000 ounces.
3 Months to
3 Months to 30/06/11 31/03/11
Production oz 15,001 11,781
Average Realised Gold Price A$/oz 1,422 1,380
Operating Cash Cost A$/oz 1,081 1,492
Project EBIT A$(m) (1.0) (4.1)
Capital Investment A$(m) 6.7 12.6
Cash at Quarter End (incl.
bullion) A$(m) 11.3 18.8
Operating Review
Gold production from the Norseman Gold Project during the
three-month period to 30 June 2011 totalled 15,001 ounces, up 27%
on the March 2011 quarter; the Bullen Decline contributed 4,944
ounces (up 40%), the Harlequin Decline contributed 6,186 ounces (up
15%), the OK Decline contributed 2,889 ounces (up 59%) and the
North Royal Open Pit contributed 931 ounces (up 186%). The
remaining 51 ounces came from the treatment of low-grade
stockpiles. As at the end of June 2011 the project stockpiles
totalled 32,000 tonnes at 1.9 g/t.
The gold price received during the quarter ranged from A$1,387
to A$1,460 per ounce, with an average price achieved of A$1,422 per
ounce. As a result of the increasing production profile, the net
direct cash operating costs per ounce for the quarter were A$1,081
per ounce of gold recovered, down 38% on the previous quarter. The
operations remain un-hedged with a gold price of approximately
A$1,470 per ounce at present.
Production
3 months
to 3 months to 3 months to 3 months to
30/09/10 31/12/10 31/03/11 30/06/11
Capital
Development metres 628 1,080 1,003 576
Ore
Development metres 1,687 1,507 1,061 1,316
Development tonnes 51,793 51,796 41,048 44,011
Grade gAu/t 3.62 1.35 1.54 2.49
Mechanised
Stoping tonnes 4,261 8,437 15,640 23,915
Grade gAu/t 3.14 5.47 3.42 3.78
Airleg
Stoping tonnes 21,767 28,181 28,951 30,265
Grade gAu/t 8.60 8.29 7.52 8.77
U/G
Production tonnes 77,821 88,414 85,639 98,191
Open Pit
Waste bcm - - 502,272 747,908
Open Pit Ore tonnes - - 11,252 32,857
gAu/t - - 1.84 1.90
Treated
Tonnes tonnes 92,346 113,066 114,099 112,084
Grade gAu/t 4.27 3.24 3.40 4.34
Recovery % 96.6% 94.8% 94.4% 95.8%
Recovered
Ounces ozs 12,229 11,162 11,781 15,001
Stockpiles tonnes - - 12,000 32,000
gAu/t - - 1.7 1.9
Bullen
Capital development to the O'Brien's reef was suspended during
the quarter as a method of conserving cash. The two boom jumbo was
instead utilised for in ore ramping to access ore blocks in the
Mararoa reef, in the vicinity of the old Regent shaft and the old
Phoenix shaft. The strategy at Bullen Decline is now focussed on
opening up this ore for mining by mechanised methods. This strategy
shown initial positive results, with the ounces produced from
Bullen increasing by 40% for the quarter, and the mine remains on
target to continue to increase its production profile.
The pillar recovery programme continued at Bullen with more
artificial pillars installed. The pillar extraction method and
artificial pillar construction is now under review by a
geotechnical specialist to ensure the veracity of the method. Once
this review is complete the process of pillar recovery can commence
as a normal production method and be expanded both at Bullen and
sections of the other underground declines.
Harlequin
The Harlequin Decline improved its performance during the
quarter with gold production up 15%. The new working area at HV1
has now commenced, in addition to development in the newly
discovered Mako reef and an improvement in productivity, especially
from ore development, is expected during the 2011/2012 financial
year. The mine also focussed on opening up more areas for
mechanised stoping during the quarter and there is an expectation
that there will be an improvement in gold produced from this method
in the September 2011 quarter.
OK Decline
At the OK Decline capital development was suspended during the
quarter while the mine continued to dewater the historic workings.
At the time of writing, the dewatering had advanced below the 20
Level of the mine and was approaching the areas where there are
intact stoping blocks that were left behind when the mine was
closed by previous owners in approximately 1998. Ore development
continued in a number of headings, mainly in the 02 and Main reef
areas. Stoping tonnes produced from OK Decline doubled from the
previous quarter, also at a slightly improved grade.
North Royal Open Pit
North Royal open pit continued to gain momentum during the
quarter. The mine focussed on getting the pit down to ore blocks as
quickly as possible, with the result that mine recovered nearly
three times as much gold as the March 2011 quarter. It is
anticipated that as the material movement continues then higher
grade blocks will be accessed which will enable more gold to be
recovered in the September 2011 quarter. Notwithstanding that the
next quarter is during the wet season, the Company remains
confident that North Royal will continue to fulfil the strategy to
fill the mill as ore recovered makes the transition from lower
grade oxide ore to higher grade transitional harder rock.
Production Outlook
The Company's review and action plan for its operations has
continued. The strategy to reduce costs and increase short term
production has been implemented with the intent to return each of
the underground mines to profitability in as short a time as
possible. The results of this programme are beginning to have a
favourable impact in terms of profitability and cash flow from the
underground mines, with headcount and fleet equipment reduced but
productivity improving as illustrated by development, mechanised
stoping and airleg stoping tonnes and grade improving resulting in
increased recovered ounces.
All discretionary expenditure has been cut and recruitment has
focussed solely on those elements of the workforce who are directly
involved in production. Despite current conditions in the mining
industry generally having made the process more difficult, with
rising salaries and wage rates especially in competing in a limited
experienced labour pool, further advancements and improvements in
productivity are expected in the upcoming quarter. However, the
Company does not see an easing in industry conditions in the medium
term and the improvement process has also not been helped by the
increase in government charges and taxes, and the increase in
regulatory and environmental consents which the Company has had to
adhere to.
While initial progress implementing the improvement strategy has
been successful the process is by no way complete and it is
expected that the production profile will improve right through the
2011/12 financial year. Once the production profile is at an
acceptable level, the Company will then continue with its
development strategy, which is to ensure that it has a pipeline of
projects available to continue to maintain its production profile,
with a full treatment plant into the long term future.
The Company's forecast gold production for the 2011/12 financial
year remains in excess of 100,000 ounces.
Operating Costs
As previously announced in the Production and Profit Update,
released on 15 April 2011, the Company has continued its review
into its operations, including detailed examination of mining
schedules and associated costs. As a result, manpower and equipment
has been streamlined to correspond with the current production
output of the underground mines.
As a result of these steps and the increasing production
profile, the net direct cash operating costs per ounce for the
quarter were A$1,081 per ounce of gold recovered and the Norseman
Gold Project generated Earnings Before Interest and Tax ('EBIT') of
(A$1.0) million. 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$11.3 million
(A$10.5 million excluding bullion). Approximately A$6.1 million of
this cash balance is committed to cash-backed environmental bonds
and the Company estimates that it had approximately 2,000 ounces of
gold sitting in stockpiles.
Capital Expenditure
A total of A$6.7 million in capital was invested during the June
2011 quarter. Significant capital expenditures made during the
quarter were on fixed and mobile plant and equipment (A$1.0
million) and capitalised mine development (A$5.4 million).
Mine Exploration
Underground diamond drilling capacity was reduced during the
quarter as a means of preserving cash while the production profile
was ramped up at the mines. A single drill rig was kept operational
at Harlequin Decline to continue with the drilling in the area of
Redfin and Perch reef to outline easily accessible resources for
the next stage of development.
Significant intersections from the drilling of Redfin, Perch and
Salamander are as listed below:
Redfin
-- 0.9m @ 6.4 g/t gold from 76.2m in drill-hole HD1948
-- 1.3m @ 4.1 g/t gold from 25.9m in drill-hole HD1953
-- 0.3m @ 35.2 g/t gold from 7.0m and
-- 0.8m @ 14.1 g/t gold from 27.9m in drill-hole HD1954
-- 3.0m @ 5.6 g/t gold from 36.6m including
o 1.1m @ 12.0 g/t gold from 38.5m in drill-hole HD1960
-- 1.0m @ 44.5 g/t gold from 61.0m in drill-hole HD1966
-- 2.4m @ 2.8 g/t gold from 42.0m in drill-hole HD1968
-- 1.8m @ 11.9 g/t gold from 32.1m including
o 0.7m @ 26.0 g/t gold from 32.8m in drill-hole HD1969
-- 1.5m @ 33.3 g/t gold from 31.5m including
o 1.0m @ 27.7 g/t gold from 31.5m and
o 0.5m @ 44.5 g/t gold from 32.5m in drill-hole HD1970
Perch
-- 3.7m @ 2.3 g/t gold from 172.8m in drill-hole HD1926
-- 2.2m @ 3.0 g/t gold from 188.5m in drill-hole HD1932
-- 0.3m @ 35.2 g/t gold from 7.0m and
-- 2.8m @ 3.7 g/t gold from 96.5m including
o 1.0m @ 8.4 g/t gold from 97.5m in drill-hole HD1933
-- 2.5m @ 12.5 g/t gold from 57.5m including
o 1.2m @ 24.5 g/t gold from 57.7m in drill-hole HD1934
-- 1.7m @ 5.1 g/t gold from 113.0m including
o 1.0m @ 7.4 g/t gold from 113.0m in drill-hole HD1936
-- 3.3m @ 1.8 g/t gold from 197.0m in drill-hole HD1937
-- 3.0m @ 1.8 g/t gold from 171.8m and
-- 4.6m @ 2.5 g/t gold from 182.2m in drill-hole HD1971
Salamander
-- 4.5m @ 3.2 g/t gold from 153.8m including
o 1.0m @ 7.7 g/t gold from 155.6m in drill-hole HD1938
-- 4.6m @ 2.4 g/t gold from 36.7m in drill-hole HD1944
-- 1.3m @ 12.7 g/t gold from 50.2m including
o 0.7m @ 22.5 g/t gold from 50.2m in drill-hole HD1946
North Royal drilling focussed mainly on the grade control of the
orebody as the pit benches were mined. Grade control results to
date reflect the orebody model upon which the open pit was
designed.
Regional Exploration and Mine Development
The activities on regional exploration were curtailed during the
quarter as the emphasis was placed on lifting the production
profile at the operating mines. Surface drilling and underground
diamond drilling was suspended until cash-flow allows the funding
of these activities. It is expected that the activities will
recommence prior to the end of the calendar year when the surface
drilling will commence on the extensions to the Slippers pit and
underground drilling will return to the Crown reef.
Drilling into the Crown reef target was also suspended during
the quarter as a means of conserving cash while the production
profile ramped up. Initial positive drill results have been
received but no conclusions can be made until the programme is
complete. The programme is targeted to test a number of potential
ore blocks which potentially total between 50,000 to 100,000 ounces
of gold and are easily accessible from the current Bullen Decline
workings. It is anticipated that the programme will recommence
prior to the end of the calendar year.
Initial significant intersections from this drilling are listed
below:
-- 0.3m @ 72.2 g/t gold from 198.4m in drill-hole CRD011A
-- 1.0m @ 5.8 g/t gold from 252.3m in drill-hole CRD012
Corporate Review
During the quarter the Company entered into a secured working
capital facility agreement with EXP T1 Ltd ('EXP'), a subsidiary of
RK Mine Finance Trust 1, a member of the Red Kite group of funds
('Red Kite'). Under the facility agreement, Red Kite will provide
up to A$15 million of working capital with interest payable at
LIBOR plus 6%, maturing on 1 July 2013 or earlier, if repaid in
full. As part of this agreement the Company has paid an origination
fee of 2% and issued 3,000,000 warrants to Red Kite. Each warrant
is exercisable for one ordinary share of Norseman Gold at 30 pence
per ordinary share for a period of two years.
The Company also entered into a gold off-take agreement with
EXP. Under the terms of the off-take agreement the Company will
supply Red Kite with its gold production up to a total of 300,000
ounces. The off-take agreement includes market pricing and is based
on Australian dollars thereby removing any foreign currency
exposure to the Norseman Gold project.
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 28 July 2011 and as tabulated below.
TABLE 1: March 2011 Open Pit & Underground Resource and
Reserve Summary
Summary
for Open Pit - 31 Mar Underground - 31
Norseman 2011 Mar 2011 Total
Grade Grade Grade
g/t Ounces g/t Ounces g/t Ounces
Tonnes gold gold Tonnes gold gold Tonnes gold gold
----------- ------ -------- ----------- ------ ---------- ----------- ------ ----------
Reserve -
Proved 13,000 1.8 760 320,000 8.3 85,000 330,000 8.5 90,000
----------- ------ -------- ----------- ------ ---------- ----------- ------ ----------
Reserve -
Probable 1,000,000 3.1 99,000 990,000 7.2 230,000 2,000,000 5.1 330,000
----------- ------ -------- ----------- ------ ---------- ----------- ------ ----------
Total
Reserve 1,000,000 3.1 100,000 1,300,000 7.7 320,000 2,300,000 5.7 420,000
----------- ------ -------- ----------- ------ ---------- ----------- ------ ----------
Resource -
Measured 5,000,000 0.7 110,000 580,000 12.3 230,000 5,600,000 1.9 340,000
----------- ------ -------- ----------- ------ ---------- ----------- ------ ----------
Resource -
Indicated 4,100,000 2.7 360,000 2,600,000 9.0 750,000 6,700,000 5.1 1,100,000
----------- ------ -------- ----------- ------ ---------- ----------- ------ ----------
Resource -
Inferred 3,200,000 2.8 290,000 6,900,000 7.7 1,700,000 10,000,000 6.2 2,000,000
----------- ------ -------- ----------- ------ ---------- ----------- ------ ----------
Total
Resource 12,000,000 1.9 760,000 10,000,000 8.3 2,700,000 22,000,000 4.7 3,400,000
----------- ------ -------- ----------- ------ ---------- ----------- ------ ----------
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: +44 (0)20 7786
4370
-------------------------- --------------------
Nandita Sahgal Seymour Pierce Ltd Tel: +44 (0)20 7107
8000
-------------------------- --------------------
Jeremy Stephenson Seymour Pierce Ltd Tel: +44 (0)20 7107
8000
-------------------------- --------------------
Hugo de Salis St Brides Media & Finance Tel: +44 (0)20 7236
Ltd 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 ounces of gold. The
mine is currently producing from three high-grade narrow-vein
underground mines - the Bullen, the Harlequin and the OK Declines
and developing the North Royal Open Pit. Currently, it has a total
resource inventory of 3.4 million ounces of gold at an average
grade of 4.7 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 additional 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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