Norseman Gold (ASX: NGX, LON: NGL) operates Australia’s longest continuously running gold mining operation, which has produced over 5.5 million ounces of gold over a period of more than 65 years from the Norseman field in Western Australia.
In addition to the two producing high-grade underground gold mines, the Company has a portfolio of highly perspective, advanced exploration targets to support continued future production. The Company has a strong management team with extensive experience in the resource, as well as considerable knowledge in corporate and strategic planning, acquisitions and finance.
Norseman Gold's OK Decline and North Royal mines remain on track
In his address at the AGM (annual general meeting), Norseman Gold’s (AIM & ASX: NGL) Chairman Vince Pendal reaffirmed the company’s operational targets, while prioritizing increasing production and reducing costs for the upcoming year.
The company’s principal asset is the Norseman gold project, which currently has a total resource inventory of 2.1 Mt (million tonnes) at a grade of 5.4 g/t (grammes per tonne) gold for 3.6 million oz (ounces), with a reserve inventory of 1.2 Mt grading 8.2 g/t gold for 310,000 oz.
The development of the third mine at Norseman has advanced and the treatment of the first tonnes from the OK Decline mine are expected during the first quarter of 2010 as mobilization and set-up continues unabated, while dewatering and surface diamond drilling are currently being conducted at the North Royal pit, which is still set for start up by the end of 2010. Norseman said that core from the initial drill holes contained visible gold, boding well for the grade of the subsequent assay results.
The potential open pit cutback at the North Royal open pit is expected to provide sufficient feed to fill the treatment plant for “a number of years.”
Overall, Pendal said that Norseman was on target to grow as planned by the start up of the third, fourth and subsequent mines to stabilise production and profits, planning to focus on growing production further and achieving more cost cuts in 2010.
“All of this work will increase the value of the Norseman Gold Project and ultimately the Company that we own. An increased production profile coupled with well controlled costs will increase the company’s profit levels and contribute to the funding of the strategy to grow the business organically,” said Pendal.
Norseman has produced 80,753 oz of gold during the year at a cash cost of A$715 per oz with both marking improvements over the previous year, while ending the year debtless and wish a cash balance of A$32.6 million.
The pre-feasibility study of the company’s OK Decline resulted in an initial inventory of 122,000 oz of gold and showed that the resource was sufficient to support a mining operation over an initial two years with an annual production of 360,000 tonnes at 5 grammes per tonne for 55,000 oz of gold at a cost of A$720 to A$780 per oz.
Norseman expects the mine life to be extended as the drilling programmes continue.
Shares in Norseman rose 6.7% in London.
