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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Norseman | LSE:NGL | London | Ordinary Share | GB00B2N7FW85 | ORD 1.25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.575 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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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