Norseman Gold (AIM: NGL, ASX: NGX) has achieved a production of 14,114 oz (ounces) of gold in the first quarter from its flagship Norseman mine, compared with 15,721 oz for the previous quarter, during a period which saw increased focus on the development of the third mine.
The production of 14,114 oz from 89,047 tonnes grading 5.05 g/t gold with a recovery grade of 97.7% was disappointing but in line with the company’s revised guidance for 2009/10 of 65,000 oz recovered at a cost of A$930/oz from the Bullen and Harlequin Declines, it said.
The company's forecast for the 2010/11 financial year remains at 105,000 to 110,000 ounces recovered at cash costs of between A$670 and 730/oz, which would be covered by increased production from the OK Decline.
Average realized gold prices were ahead of the previous quarter at A$1,224/oz compared to A$1,203/oz with slightly higher operating costs, which increased from A$933/oz to A$990/oz, leading to a project EBIT (earnings before interest and taxes) of A$0.7 million compared to A$1.2 million. Capital investment for the period slid from A$11.5 million to A$8.6 million, spent on exploration, capitalised mine development and equipment associated with the development of the OK Decline. Cash at the end of the quarter amounted to A$21.7 million, down from A$24.9 million at the end of the previous quarter.
The initial deep drill-hole to test the continuity of reef between the Harlequin South resource and the Perch Reef resource successfully intersected structure with assays pending. During the month of March 2010 the Harlequin mine produced in excess of 21,000 tonnes of ore which is a record since Norseman Gold assumed control of the operations.
The capital development has also progressed at the Norseman Incline and is proceeding up to defined blocks on the upper part of the St Patrick's Reef. Diamond drilling continued and is expected to delineate more areas for development and stoping particularly once the second diamond drill rig commences at Bullen towards the end of the June 2010 quarter.
Diamond drilling at Harlequin during the March 2010 quarter has continued its focus on the Perch Reef. The results included an intercept of 0.2 metres at 36.1 g/t (grammes per tonne) gold, while drilling at Bullen returned an intersection of 0.4 metres at 32.1 g/t gold, while St Patrick’s Reef drilling intersected intervals of 3.5 metres at 5.4 g/t gold, including 1.2 metres at 12.5 g/t gold, and 2.2 metres at 2.6 g/t gold. Drilling at Mt Barker Reef at Norseman returned intersections of 2 metres grading 11.1 g/t gold, 1.2 metres at 39.6 g/t gold, 4.8 metres at 8.4 g/t gold and 0.3 metres at 22.7 g/t gold.
The latest results from the Star of Erin Reef include 0.6 metres at 549 g/t gold and 1 metre at 5 g/t gold.
A fourth underground diamond drill rig is expected to be delivered to site by the end of April 2010, and will allow two underground rigs at Bullen, to accelerate the drilling programme.
On the production front, operations continued in lower grade areas with the focus on opening up areas for future stoping. or the quarter, the Bullen Decline contributed 5,574 ounces, and the Harlequin Decline contributed 8,304 ounces with 236 ounces from development ore at the OK Decline.