TIDMNGL
RNS Number : 1261R
Norseman Gold PLC
31 October 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
September 2011
Norseman Gold, the AIM-listed and ASX-listed Australian gold
production and exploration company announces a three-month progress
report on its activities for the period to 30 September 2011.
Overview
-- Mining continued at the North Royal open pit with an
estimated 66,000 tonnes containing approximately 3,600 ounces of
gold now stockpiled for blending with hard rock ore
-- Hard rock ore is expected from the North Royal open pit in the December quarter
-- Ore mined from underground and open pit operations increased
for the third consecutive quarter
-- Gold produced for the quarter was 11,631 ounces at a direct
cash operating cost of A$1,591 per ounce of gold
-- The production outlook is expected to improve through the
next quarter as new personnel are employed to alleviate the current
manpower issue in the underground mines and as the North Royal open
pit continues to be mined towards hard rock ore
-- Cash on hand at the end of the quarter totalled A$8.9million,
or A$7.5 million excluding gold bullion
-- Subsequent to quarter end Norseman completed a conditional
GBP6.9m equity placement and GBP5.1m convertible loan note
placement, appointed Northland Capital Partners Limited as
Nominated Adviser and joint Broker and Mr. David Steinepreis to the
Board of Directors (announced 26 October 2011)
3 Months to 30/09/11 3 Months to
30/06/11
Production oz 11,631 15,001
Average Realised Gold Price A$/oz 1,609 1,422
Operating Cash Cost A$/oz 1,591 1,081
Project EBIT A$(m) (5.5) (1.0)
Capital Investment A$(m) 4.9 6.7
Cash at Quarter End (incl.
bullion) A$(m) 8.9 11.3
Operating Review
Gold production from the Norseman Gold Project during the
three-month period to 30 September 2011 totalled 11,631 ounces,
down 22% on the June 2011 quarter; the Bullen Decline contributed
3,619 ounces (down 27%), the Harlequin Decline contributed 4,796
ounces (down 22%), the OK Decline contributed 1,268 ounces (down
56%) and the North Royal Open Pit contributed 1,948 ounces (up
109%). As at the end of September 2011 the project stockpiles
totalled 66,000 tonnes at 1.7 g/t.
Although recovered ounces decreased, total tonnes mined from
both underground and open pit increased for the third quarter in
succession, as did the total processed tonnes. The lower recovered
ounces were therefore a reflection of a lower average grade.
Stockpiled ore now totals approximately 66,000 tonnes containing an
estimated 3,600 ounces of gold, a 1,600 ounce increase from last
quarter. The Company is currently looking to add a third shift at
the mill in expectation that it will begin operating at full
capacity in the current quarter in line with its fill the mill
strategy.
The gold price received during the quarter ranged from A$1,381
to A$1,765 per ounce, with an average price achieved of A$1,609 per
ounce. As a result of the decreased production profile, the net
direct cash operating costs per ounce for the quarter were A$1,591
per ounce of gold recovered. Actual direct operating costs remained
stable in line with previous quarters and were under budget for the
quarter. The operations remain un-hedged with a gold price of
approximately A$1,630 per ounce at present.
Production
3 months 3 months 3 months 3 months
to 31/12/10 to 31/03/11 to 30/06/11 to 30/0911
Capital Development metres 1,080 1,003 576 596
Ore Development metres 1,507 1,061 1,316 1,312
Development tonnes 51,796 41,048 44,011 47,850
Grade gAu/t 1.35 1.54 2.49 1.68
Mechanised Stoping tonnes 8,437 15,640 23,915 27,303
Grade gAu/t 5.47 3.42 3.78 3.28
Airleg Stoping tonnes 28,181 28,951 30,265 28,571
Grade gAu/t 8.29 7.52 8.77 5.31
U/G Production tonnes 88,414 85,639 98,191 103,724
Open Pit Waste bcm - 502,272 747,908 776,836
Open Pit Ore tonnes - 11,252 32,857 48,659
gAu/t - 1.84 1.90 2.84
Treated Tonnes tonnes 113,066 114,099 112,084 118,384
Grade gAu/t 3.24 3.40 4.34 3.20
Recovery % 94.8% 94.4% 95.8% 95.5%
Recovered Ounces ozs 11,162 11,781 15,001 11,631
Stockpiles tonnes - 12,000 32,000 66,000
gAu/t - 1.7 1.9 1.7
Bullen Decline
Development at Bullen continued on access to the Mararoa reef
ore, with headings mainly accessing low grade material on the way
to the higher grade sections of the ore block. Ore development also
continued in St Patrick's reef through narrow but high grade veins.
However the expected improvement in the development rate for this
quarter was slowed due to reduced manpower, although the Company is
actively seeking to address this issue.
The pillar recovery programme at Bullen is awaiting the final
geotechnical report after which a crew will be manned up and the
programme will continue.
Harlequin Decline
Harlequin development continued on HV1, Mako and Perch reef. The
development rates did not improve as expected during the quarter
due to a lack of manning with the second single boom development
jumbo stood down for a lack of experienced operators. The
development continued in expected grade in Mako and Perch, but low
grade in HV1. Slower than expected development advance and
development past the expected reserve-resource boundary reduced the
availability of long hole stoping areas, which are now targeted to
come into production in the December 2011 quarter.
OK Decline
At the OK Decline development continued in the 02, 03 and Main
reef, with minor stoping in the upper levels of the mine. The
progress was hampered by the loss of manning due to personnel being
allocated to Bullen and Harlequin to ensure that priority access to
future high grade areas were developed during the quarter. This has
meant that mining at the OK Decline has had to be scaled back to
day shift only. Dewatering has advanced to the top of the 21 Level
(lowest point at the 22 Level). Decline and access rehabilitation
is required to access the ore on the 19 Level and below, which will
occur once full manning is achieved and the development rates
return to the targeted levels.
North Royal Open Pit
North Royal open pit continued in line with expectations during
the quarter. As expected during this part of the year, time was
lost due to the weather as the quarter encompasses the winter
rainfall period. Excavation continued to focus on mining the pit
down to hard rock ore blocks as quickly as possible. Harder rock
has been encountered in the south west corner of the pit and in the
central pit area, but not in areas where there was associated ore.
The harder rock has been drilled in preparation for blasting. Drill
and blast operations will become more routine during the December
quarter as more fresh rock is exposed in the pit floor. Ore from
harder rock is still expected in this, the December quarter, with
quantities increasing as the pit is dug deeper.
Production Outlook
The Company has been focussed on the employment of experienced
underground operators and has changed the remuneration packages and
introduced incentive bonus schemes to encourage and retain its
workforce. Recruitment to fill an estimated 60 vacancies on site
has continued and a number of new employees are arriving in the
December quarter. Once the manning levels are up to the required
numbers then the production profile will improve as expected.
Meanwhile, OK Decline will continue to be under resourced as
resources are diverted to Harlequin and Bullen to ensure that the
higher grade areas at Bullen and Harlequin are accessed in a timely
manner.
The Company is continuing to focus on training new entrants to
the mining industry, and training its current employees to improve
their skills and capabilities to further relieve the operator
shortage and to assist with retention. The Company is also in
discussion with contract mining companies with a view converting at
least one of the underground mines to contract mining in lieu of
owner/operator mining.
The Company has also recruited a number of new technical staff
who will arrive on site in the December quarter.
The production outlook is expected to improve through the
quarter as new personnel are employed in the underground mines and
the North Royal open pit continues to be mined towards hard rock
ore.
Operating Costs
Due to the decrease in the recovered ounces the net direct cash
operating costs per ounce for the quarter increased to A$1,593 per
ounce of gold recovered and the Norseman Gold Project generated
Earnings Before Interest and Tax ('EBIT') of ($5.5) million. The
Norseman Gold Project EBIT does not include the corporate costs of
Norseman Gold Plc. Actual operating costs remained in line with
previous quarters, and were approximately A$1.9 under budget.
Cash Balances
Cash balances at the end of the period totalled A$8.9 million
(A$7.5 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 3,600 ounces of
gold sitting in stockpiles.
In addition, the loan facility provided by Red Kite announced in
July 2011 has been fully drawn.
Subsequent to quarter end Norseman completed a conditional
GBP6.9m equity placement and GBP5.1m convertible loan note
placement (announced 26 October 2011).
Capital Expenditure
A total of A$4.9 million in capital was invested during the
September 2011 quarter. The majority of this was in capitalised
mine development (A$3.8 million) and capitalised exploration (A$0.9
million). This level of capital expenditure, a reduction from
previous quarters, reflects the management's continued efforts to
conserve cash resources while gold production has remained below
expectations.
Mine Exploration
Underground diamond drilling operated between the single
hydraulic rig and the smaller compressed air rig as drilling was
confined to exploring extensional resources around current
development.
Significant intersections from the drilling of Redfin and Perch
reef are as listed below:
Redfin
-- 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
Perch
-- 1.7m @ 7.8 g/t gold from 172.0m including
o 1.0m @ 11.5 g/t from 172.0m in drill-hole HD1926
North Royal drilling continued to focus on the grade control of
the orebody as the pit benches were mined.
Corporate Review
During the quarter Mr. Michael De Villiers resigned as a
director for personal reasons.
Subsequent to the end of the quarter the company announced the
following items;
-- The appointment of Northland Capital Partners Limited
("Northland") as its Nominated Adviser and joint Broker.
-- The Company has raised GBP5,087,000 through a placing of
secured Convertible Loan Notes and a conditional placing of up to
138,260,000 new ordinary shares of GBP0.0125 each in the capital of
the Company at a price of 5p per share to raise an additional
GBP6,913,000.
-- The Company has the appointed Mr David Steinepreis to the
Board of Directors with immediate effect. David (aged 54) is a
Chartered Accountant and a former partner of International
accounting firm, KPMG, where he specialised in strategic corporate
advice and taxation for listed companies. In 1987, Mr. Steinepreis
entered commerce as a director, adviser and shareholder of a number
of ASX listed companies in the gold, diamonds, oil and new mining
technology sectors and since that time he has gained a reputation
in the junior mining sector for building a series of successful
enterprises in Australia and the UK. He is a UK resident since
2006, is Managing Director of AIM listed North River Resources Plc
and was formerly a director of Norseman Gold Plc, having resigned
on 30 July 2010 to pursue other interests.
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 Total
Norseman 2011 Mar 2011
---------------- ----------------------------- ------------------------------- -------------------------------
Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces
g/t gold g/t gold g/t gold
gold 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: 020 7786 4370
William Vandyk Northland Capital Partners Ltd Tel: 020 7796 8800
Rod Venables Northland Capital Partners Ltd Tel: 020 7796 8800
Susie Geliher St Brides Media & Finance Ltd Tel: 020 7236 1177
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 3.4 million ounces of gold at an average
grade of 4.7 g/t.
The tenements cover a 2,360 sq km area centred on the Norseman
Township. The landholding comprises 221 tenements consisting of 85
Exploration Licences, 108 Mining Licences, 3 Prospecting Licences,
15 Miscellaneous Licences, 5 Exploration Licence Applications, 3
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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