TIDMNGL
RNS Number : 3353A
Norseman Gold PLC
31 January 2011
Norseman Gold plc / Epic: NGL / Index: AIM / Sector: Mining
& Exploration
31 January 2011
NORSEMAN GOLD PLC
('Norseman Gold' or 'the Company')
Three-Month Report On Activities For The Period Ended 31
December 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
December 2010.
Overview
-- The Company's capital investment programme continued during
the quarter with expenditure of A$14.6M on exploration, capitalised
mine development and equipment.
-- The Company's efforts to improve its production have not
yielded a positive result in the December 2010 quarter, however,
the Company's new ore sources, OK Decline and North Royal Open Pit,
are poised to make a marked contribution during the March 2011
quarter.
-- The Company remains committed to its "fill the mill" strategy
and has made significant progress in the development of its two new
mines that will ultimately result in the Company achieving its
forecast 140,000 ounces per annum.
-- OK Decline, the company's third mine, has commenced producing
ore from stoping, which is anticipated to increase during the March
2011 quarter.
-- Mining activities commenced in December 2010 at North Royal
Open Pit the company's fourth mine. The first parcel of low-grade
ore was mined in early January 2011.
-- The Company achieved record total underground development of
2,587 metres during the quarter as the focus continued on opening
up more working areas to improve production performance.
-- Gold production from the Norseman Gold Project during the
three months to 31 December 2010 totalled 11,162 ounces at a cash
operating cost of A$1,342 per ounce gold, generating a Project EBIT
of (A$5.4M).
3 Months to 3 Months to
31/12/10 30/09/10
Production oz 11,162 12,229
Average Realised Gold Price A$/oz 1,385 1,356
Operating Cash Cost A$/oz 1,342 1,041
Project EBIT A$(m) (5.4) (1.1)
Capital Investment A$(m) 14.6 6.8
Cash at Quarter End (incl.
bullion) A$(m) 17.1 10.9
Operating Review
Gold production from the Norseman Gold Project during the
three-month period to 31 December 2010 totalled 11,162 ounces; the
Bullen Decline contributed 3,348 ounces, the Harlequin Decline
contributed 5,950 ounces and the OK Decline contributed 1,113
ounces. The remaining 750 ounces came from the treatment of
low-grade stockpiles.
During the quarter, gold production from the Norseman Gold
Project exceeded 250,000 ounces recovered since the Company took
over the operations in May 2007. To date the Company has recovered
8 tonnes of gold from the project.
The gold price received during the quarter ranged from A$1,350
to A$1 428 per ounce, with an average price achieved of A$1,385 per
ounce. As a result of the lower production profile, the net direct
cash operating costs per ounce for the quarter were A$1,342 per
ounce of gold recovered. The operations remain un-hedged with a
gold price of approximately A$1,339 per ounce at present.
Production
3 months
to 3 months to 3 months to 3 months to
31/03/10 30/06/10 30/09/10 31/12/10
Capital
Development Metres 744 415 628 1,080
Ore
Development Metres 1,272 1,682 1,687 1,507
Development Tonnes 41,329 46,622 51,793 51,796
Grade gAu/t 2.28 2.69 3.62 1.35
Mechanised
Stoping Tonnes 12,193 11,770 4,261 8,437
Grade gAu/t 2.50 1.80 3.14 5.47
Airleg
Stoping Tonnes 35,367 30,145 21,767 28,181
Grade gAu/t 9.15 10.55 8.60 8.29
U/G
Production tonnes 88,889 88,537 77,821 88,414
Treated
Tonnes Tonnes 89,047 89,015 92,346 113,066
Grade gAu/t 5.05 5.23 4.27 3.24
Recovery % 97.7% 96.7% 96.6% 94.8%
Recovered
Ounces Ozs 14,114 14,469 12,229 11,162
The Company continued to develop reef at the three underground
mines, again exceeding the record development set in the previous
quarter by completing 2,587 metres of underground development. This
development continues to access further ore sources to be stoped in
the future and will ultimately stabilise production from the
underground mines at a more acceptable level.
Capital development at the Bullen Decline continued in the
Norseman Incline, and the access to St Patrick's reef was
completed. The development rig is now driving towards the old
workings surrounding the Regent shaft to complete the ventilation
circuit for this part of the mine. It is also anticipated that
there will be remnant resources available in this area to be
mined.
Additionally, work to access the high-grade O'Brien's Reef
continued, although this was suspended for the last month of the
quarter to allow the drilling of the Bullen West reef. Ore
development continued on the upper St Patrick's reef. The
production performance at Bullen has improved during the quarter
but is still not up to expectations. The productivity improvement
should continue into the March 2011 quarter.
The Harlequin Decline performed poorly during the quarter. Ore
development concentrated on the Redfin-Perch reef to open up blocks
for airleg and mechanised stoping. The development has extended
through the low-grade area in the orebody to the known high-grade
blocks by the end of the quarter. This long-length ore development
in the Perch reef has reduced productivity and caused issues with
ventilation and power to the working areas. It has also caused
issues with scheduling as the orebody is not closed off along
strike. A revision of the mine plan will result in the return of
production to more acceptable levels but will take some months to
complete. A shortage of operators and a tighter labour market
through December 2010 has further exacerbated the issues, but
recruitment and training are being addressed and again the March
quarter should see an improvement in staffing.
Diamond drilling of the Perch reef at Harlequin will recommence
in the March 2011 quarter in an effort to delineate the extent of
this reef and to enable better planning of the mining of it. Also,
a new footwall reef that has developed under the Perch reef will
also be drilled to ensure that the mining and development of this
additional high-grade reef does not further affect production at
Harlequin.
At the OK Decline capital development continued to open up
working areas during the quarter. Ore development took place in a
number of headings on the Main, O2 and Star of Erin reef. Stoping
commenced at OK in October 2010 but was slowed by the installation
of the emergency egress ladder-ways in the areas of the mine that
were due to be stoped. The installation is expected to be complete
by the end of January 2011 and this will allow four stopes to be
commenced resulting in a significant increase in the tonnes
produced from this mine.
The final installation of infrastructure underground for the
continued dewatering of the mine was also completed. Water from the
historic working areas and water produced from mining activities
can now be pumped to the treatment plant as process water, and
dewatering to the bottom of the mine where known high grade stoping
blocks exist can now proceed. At the time of writing dewatering
efforts had advanced below the mine 17 Level.
Production Outlook
The Company's efforts to improve its production have not yielded
a positive result in the December 2010 quarter, including the fact
there has not been a significant increase to gold production by the
commencement of stoping at OK Decline, nor from ore mining at North
Royal. However, both of these new ore sources are poised to make a
marked contribution and as a consequence, the Company is confident
that there will be a production improvement during the March 2011
quarter that will reflect the introduction of these new ore sources
to the treatment plant.
The Company expects that full time milling will commence in
February 2011, initially with low-grade ore and then higher grade
ore as the production increases and lower grade material is able to
be stockpiled.
The Company will be reviewing its forecast in the future once it
has established the production profile of these two new major ore
sources.
The Company remains committed to its "fill the mill" strategy
and has made significant progress in the development of the OK
Decline and on the North Royal Open Pit, progress that will
ultimately result in the Company achieving its forecast 140,000
ounces per annum.
Operating Costs
As a result of the lower production profile, the net direct cash
operating costs per ounce for the quarter were A$1,342 per ounce of
gold recovered and the Norseman Gold Project generated Earnings
Before Interest and Tax ('EBIT') of (A$5.4) 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$17.1 million
(A$15.4 million excluding bullion). Approximately A$6.1 million of
this cash balance is committed to cash-backed environmental
bonds.
Capital Expenditure
Capital expenditure continued to be focussed around the
development of the OK Decline. Expenditure was also incurred on
drilling and pre-development work at the North Royal Open Pit.
A total of A$14.6 million in capital was invested during the
December 2010 quarter. Significant capital expenditures made during
the quarter were on fixed and mobile plant and equipment (A$5.5
million), exploration (A$3.2 million) and capitalised mine
development (A$4.6 million).
The capital investment in the December quarter takes the total
capital invested for the year to date to $21.5 million of which
$20.4 million has been funded from cash resources. This represents
a significant investment in the future of the Norseman Gold Project
and is already nearly 70% of the total capital invested from cash
resources for the entire 2009/10 financial year.
Mine Exploration
Underground diamond drilling continued to return excellent
results during the quarter including the best single intersection
from the Bullen Decline since the company took control in May
2007.
The diamond drill rig at the Bullen Decline moved to the
potential extension of the Bullen and Bullen West reef during the
quarter. The geology of the target area has proven to be
complicated and the diamond drill rig has moved from its initial
location at the Bullen 22 Level stockpile to the O'Brien's Decline
to better target the potential extension to the Bullen West reef.
Significant intersections are as listed below:
Bullen West
-- 1.4m @ 451.6 g/t gold from 154.5m including
o 0.4m @ 1,734.0 g/t gold from 155.5m and
-- 0.5m @ 17.0 g/t gold from 180.0m in drill-hole BN864
Harlequin drilling continued to focus on targets that might
provide another work area away from the current concentration
around the Redfin-Perch reef. It is expected that the drill rig
will move back to the drilling of the Redfin-Perch reef during the
March 2011 quarter. Significant intersections from the drilling of
HV10 and HV1E are as listed below:
HV10
-- 0.9m @ 70.9 g/t gold from 107.9m including
o 0.5m @ 120.0 g/t gold from 107.9m in drill-hole HD1871
-- 0.5m @ 35.6 g/t gold from 128.0m and
-- 0.1m @ 40.9 g/t gold from 131.5m in drill-hole HD1877
HV1E
-- 0.7m @ 28.6 g/t gold from 161.0m including
o 0.4m @ 40.2 g/t gold from 161.0m in drill-hole HD1882
The OK Decline diamond drill rig continued the programme to
target the Star of Erin reef along strike from the current proposed
working areas. During the March 2011 quarter, this rig will
commence drilling the OK Main reef structure following completion
of the Star of Erin reef programme. Further significant
intersections received for the Star of Erin reef are as listed
below:
-- 2.0m @ 5.2 g/t gold from 32.7m and
-- 0.7m @ 8.7 g/t gold from 154.4m in drill-hole OKD274
-- 1.3m @ 49.4 g/t gold from 114.2m including
o 0.3m @ 228.0 g/t gold from 114.2m in drill-hole OKD350
-- 5.4m @ 2.1 g/t gold from 84.4m in drill-hole OKD352
-- 0.5m @ 10.7 g/t gold from 98.2m and
-- 0.9m @ 42.0 g/t gold from 214.1m in drill-hole OKD359
-- 0.4m @ 17.1 g/t gold from 75.6m in drill-hole OKD360
-- 0.3m @ 55.0 g/t gold from 81.3m in drill-hole OKD361
-- 1.0m @ 9.9g/t gold from 68.2m and
-- 1.4m @ 9.1 g/t gold from 90.0m in drill-hole OKD371
-- 1.5m @ 6.3 g/t gold from 113.4m in drill-hole OKD374
-- 1.2m @ 5.4 g/t gold from 68.5m in drill-hole OKD394
-- 0.4m @ 14.1 g/t gold from 71.1m in drill-hole OKD396
Regional Exploration and Mine Development
The main focus for the exploration and developments efforts of
the Company during the December 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, to the extent that mining activities commenced
in December 2010.
Dewatering continued and the pit was 77% dewatered at the end of
the quarter. The dewatering rates have continued to improve
although the pumps now have to be moved in-pit more often as the
rate of vertical drop of the water level accelerates. At the time
of writing, the dewatering was over 80% complete and is now at a
level that mining can be undertaken unhindered whilst the remaining
20% is dewatered.
All regulatory approvals have now been received and additional
environmental bonds have been lodged with the regulatory bodies to
enable open pit mining.
The open pit earthmoving contract has been awarded and the
contractor has mobilised a majority of the fleet to site. Site
facilities are being established and the work force continues to be
mobilised. Full time operations on twenty-four hour, seven day a
week mining were started in January 2011.
The drill and blast contract has also been awarded and the first
round of grade control drilling has commenced. The contractor will
fully mobilise in early February 2011 when more grade control is
required, and when drill and blast is expected to commence. First
low grade ore was excavated in early January 2011, with first high
grade expected late March 2011.
Recruitment of Norseman Gold staff to manage the North Royal Pit
is well advanced with engineering and geology functions recruited
and management positions near complete.
The second round drilling of the Tiara reef was completed to
infill and extend the mineralisation intersected in the first round
drilling with the significant results listed below. Further
drilling is required for the area however there is difficulty in
accessing sites adjacent to the current pit excavation. More
suitable locations to follow up on this reef will be made available
as the new pit cutback is mined.
-- 2.0m @ 2.9 g/t gold from 97.0m and
-- 1.0m @ 9.0 g/t gold from 107.0m in drill-hole NRRC162
-- 7.0m @ 4.3 g/t gold from 100.0m including
o 1.0m @ 14.9 g/t gold from 105.0m in drill-hole NRRC164
-- 6.0m @ 1.1 g/t gold from 98.0m in drill-hole NRRC168
-- 3.0m @ 2.2 g/t gold from 114.0m in drill-hole NRRC169
-- 2.0m @ 2.6 g/t gold from 128.0m in drill-hole NRRC170
-- 6.0m @ 1.2 g/t gold from 149.0m and
-- 2.0m @ 3.8 g/t gold from 159.0m in drill-hole NRRC171
-- 3.0m @ 7.8 g/t gold from 97.0m including
o 1.0m @ 17.1 g/t gold from 98.0m and
-- 12.0m @ 4.8 g/t gold from 135m including
o 1.0m @ 7.9 g/t gold from 137.0m
o 1.0m @ 12.2 g/t gold from 138m
o 1.0m @ 5.3 g/t gold from 139.0m
o 1.0m @ 5.1 g/t gold from 140.0m
o 1.0m @ 7.8 g/t gold from 144.0m in drill-hole NRRC174
Follow up drilling of the intersections from sterilisation
drilling of the area outlined for the waste dump for the initial
pit operations was completed during the quarter. The only
significant result is listed below and the area of laterite
mineralisation has now been effectively closed off.
-- 2.0m @ 3.4 g/t gold from 23.0m including
o 1.0m @ 6.5 g/t gold from 24.0m in drill-hole NRRC131
Butterfly Deeps
Exploration has continued drilling the underground target,
Butterfly Deeps, from a drill location at the Bullen Decline. This
target is an interpreted high-grade shoot down plunge of historic
stoping areas in the old Butterfly workings. During the quarter the
drilling progressed towards the prospective part of the target area
and the following significant results were received:
-- 0.7m @ 40.6 g/t gold from 236.0m in drill-hole BFD007
-- 1.3m @ 13.8 g/t gold from 322.1m including
o 0.8m @ 17.9 g/t gold from 322.1m in drill-hole BFD008
-- 0.8m @ 11.0 g/t gold from 275.2m in drill-hole BFD009
-- 1.3m @ 6.3 g/t gold from 339.3m in drill-hole BFD010
-- 2.9m @ 2.4 g/t gold from 410.9m and
-- 2.7m @ 2.9 g/t gold from 423.0m including
o 0.7m @ 8.6 g/t gold from 424.0m in drill-hole BFD012
-- 1.9m @ 10.6 g/t gold from 292.7m including
o 1.0m @ 19.2 g/t gold from 292.7m in drill-hole BFD018
To date drilling has confirmed the expected model, which is a
gold shoot below the historic Butterfly workings, south of where
the Golden Fault is projected to intersect the Butterfly reef; the
better drilling intersections reported above are located on and to
the south of where the Golden Fault cuts the Butterfly reef.
The current drilling platform at Bullen 18 Level is not
satisfactory to continue to test Butterfly Deeps much further south
so a new drill location will be established to allow the
continuation of this programme. In the meantime, the drill rig will
move to a location to commence drilling the Crown Reef to the north
and below the 300 m RL, targeting the previously defined
resource.
Corporate Review
The Company is continuing on with its strategy to "fill the
mill" and expects there will be noticeable improvements in gold
production from the project when full time milling is resumed.
Initially, the mining schedule delivers low-grade ore only to
commence this process but shortly thereafter, production from OK
Decline and North Royal Open Pit will fill the treatment plant to
capacity with normal ROM feed. Accordingly, it is anticipated that
the gold production levels will rise to the forecast levels of
30,000 to 35,000 ounces per quarter by the end of the June 2011
quarter.
The Company will be reviewing its forecast once it has
established the production profile of the two new major ore
sources, and has had time to more accurately determine what is the
achievable mill throughput once the blending of ore from all
sources is taking place.
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
for Open Pit - 31 Mar Underground - 31
Norseman 2010 Mar 2010 Total
----------- ------------------------------- ------------------------------ -------------------------------
Grade Grade Grade
g/t Ounces g/t Ounces g/t Ounces
Tonnes gold gold Tonnes gold gold Tonnes gold gold
----------- ----------- ------ ---------- ---------- ------ ---------- ----------- ------ ----------
Reserve -
Proved 0 0.0 0 230,000 12.0 89,000 230,000 12.0 89,000
----------- ----------- ------ ---------- ---------- ------ ---------- ----------- ------ ----------
Reserve -
Probable 440,000 3.2 45,000 1,100,000 7.9 280,000 1,500,000 6.8 330,000
----------- ----------- ------ ---------- ---------- ------ ---------- ----------- ------ ----------
Total
Reserve 440,000 3.2 45,000 1,300,000 8.9 370,000 1,700,000 7.7 420,000
----------- ----------- ------ ---------- ---------- ------ ---------- ----------- ------ ----------
Resource -
Measured 5,000,000 0.7 110,000 410,000 14.4 190,000 5,400,000 1.7 300,000
----------- ----------- ------ ---------- ---------- ------ ---------- ----------- ------ ----------
Resource -
Indicated 3,600,000 2.6 300,000 2,200,000 10.9 770,000 5,800,000 5.9 1,100,000
----------- ----------- ------ ---------- ---------- ------ ---------- ----------- ------ ----------
Resource -
Inferred 4,100,000 5.8 760,000 6,200,000 8.0 1,600,000 10,000,000 7.5 2,400,000
----------- ----------- ------ ---------- ---------- ------ ---------- ----------- ------ ----------
Total
Resource 13,000,000 2.9 1,200,000 8,800,000 8.9 2,600,000 21,000,000 5.3 3,800,000
----------- ----------- ------ ---------- ---------- ------ ---------- ----------- ------ ----------
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: 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 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 3.8 million ounces 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 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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