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Norseman says Q1 production levels in line

Published: 21:49 27 Oct 2010 AEDT

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Norseman Gold (LON:NGL, ASX:NGX) said that gold production was in line with its expectations in the first quarter, and the OK Decline is expected to produce ore from stoping this month.

Norseman produced 12,229 ounces of gold in the three months to 30 September 2010.

The Norseman mine in Western Australia is the country’s longest continuously running gold mining operation.

Operations were temporary suspended at the OK Decline after a serious accident. Consequently production dropped below its earlier targets. Mining operations resumed near the end of August, and stoping is expected to start shortly.

Mining operations at the Norseman mine’s other two declines, Bullen and Harlequin, were unaffected and they continued to operate as normal throughout the period.

The company has also made progress on a fourth mine at the site, with the North Royal Open Pit currently dewatering. Around 60% of the water has now been pumped out.

Norseman recently raised £11.25 million to help bring North Royal into production, and it is confident it will receive final approvals for the development once it submits the regulatory documents.

Meanwhile, underground it achieved a record 2,315 metres of development in the period, and it said it will focus on opening up more areas to improve its production.

The Bullen decline contributed 2,485 ounces, Harlequin contributed 8,872 ounces and 425 ounces were produced from ‘development ore’ at the OK Decline.

A further 447 ounces came from the treatment of low grade stockpiles.

Norseman achieved gold prices between A$1,295 and A$1,418 per ounce, with a A$1,354 average price.

The mining operation remains un-hedged, therefore it would be affected by a further rise to the current gold price - which is around AU$1,366 per ounce.

Cash costs increased due to the lower production profile with the net direct cash operating costs at AU$1,041 per ounce of gold recovered.

The company ended the period with A$10.9 million in cash and bullion.

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