Norton Gold Fields (ASX: NGF) key asset is the 150,000 ounce per annum Paddington Gold Mine in the Kalgoorlie Goldfields of Western Australia.
Norton Gold Fields builds further gold cash flow with Homestead gold mine development
Norton Gold Fields Limited (ASX:NGF) today announced it has begun development of the Homestead underground gold mine in Western Australia.
Homestead is planned to contribute 29,000 oz in FY2010 and 65,000 oz in FY2011 with first ore to be delivered in December 2009. Paddington’s production is expected to lift from the current 150,000 oz pa from open cut operations to over 200,000 oz pa in FY2011.
Managing Director, Jon Parker, said, “Homestead is one of our most promising project areas in terms of the quality and quantity of the resource and its potential to contribute to profitable operations”.
“Development of an underground mine pipeline is central to our goal of making Paddington a great long-life and highly profitable mine,”
Estimated total cash cost of $598 per oz includes $13.1M capital costs for initial development and infrastructure, $1.25M of which has been expended on acquiring infrastructure assets from a recently closed nickel mine.
At a gold price of A$1,100 per oz the project has an expected NPV of A$35.1M (discounted cashflow at 15%). Development will be funded from Paddington’s operating cash flow.
The mill feed grade from Homestead is planned at 7.4 g/t.
Access to the ore body will be from a twin decline 1,300 metres from a portal in the depleted Quarters open cut mine. Twin declines enable increased production capacity, improved ventilation and a dual means of egress during development and mining versus a spiral decline from the depleted Homestead open cut mine.
Homestead has a Probable Ore Reserve of 428,000 tonnes at 7.4 g/t. The deposit is open at depth and along strike and has a number of parallel structures that require further exploration to prepare for mining.
Mineralisation is hosted in quartz veins similar to those in the now depleted Quarters Mine which is 1 km to the north and in the same geological setting and which produced 339,000 oz of gold at a grade of 6.2 g/t from underground operations.
The addition of an underground project to Paddington will broaden the Company’s operational capability. The high grade ore de-risks the open cut base load feed by increasing gold output at an improved margin. The profitability of Homestead is enhanced with Paddington’s efficient and low cost 3.3 Mtpa gold processing plant, fed largely from base-load open cut ore.
Norton Gold Fields Limited is one of the largest ASX-listed Australian gold producers. It also has active gold, copper and coal exploration projects.
The Company produces around 150,000 oz of gold per year from its Paddington Gold Mine near Kalgoorlie, Western Australia. Output is expected to increase towards 200,000 oz pa during FY2010 with the planned development of Homestead underground mine.
Development of the Queensland Mount Morgan Mine Project will add a further 30,000 to 35,000 oz pa gold production. Development has been approved by the Board subject to suitable funding; once funding is secured Mount Morgan can be in production within twelve months.
Completion of Homestead and Mount Morgan mines will drive total gold production to 230,000 to 250,000 oz pa from late 2010 as well as diversify the production source.
