Norseman Gold (LON:NGL, ASX:NGX) is closer to adding a fourth mine to its Norseman gold project in Australia after making both operational and regulatory progress at the North Royal open pit.
The company said that pit optimisation at North Royal has identified 85,000 ounces of resource capable of being mined in the initial Main Pit area, while reporting progress with the dewatering as well as obtaining regulatory approvals for the commencement of mining.
So far, Norseman has secured approval from the Department of Mines & Petroleum (DMP) to commence surface infrastructure works and has received a bond request from the DMP relating to the mining activities proposed.
Full approval to commence mining is expected following submission of final pit designs, geotechnical reports and lodgement of the requested environmental bond.
A final document for board approval is expected in October and the commencement of mining is anticipated in December this year.
Obtaining the approvals for the commencement of mining has previously been reported as a time risk for the project.
In other news, the dewatering is now 54% complete, helping achieve further access into the open pit to allow resource drilling to commence.
The drilling is expected to confirm the current mining study.
Initial optimisations of an updated resource, which have now been completed, have indicated that there is potentially 85,000 ounces of resource that can be mined within the current pit shape within the Main Pit area.
The initial optimisation was calculated at a gold price of A$1,000/oz. Norseman will now conduct further review and redesign at various gold price and mining scenarios, following an infill drilling that is to be carried out as the dewatering progresses.
Possible extensions to the reef in those directions will be tested with further work on the pit shape.
Follow up drill programmes on the reef targets are expected to support a significant extension to North Royal's mine life beyond the proposed initial Main pit area.
Norseman has also said that sterilisation drilling has commenced on the proposed waste dump area with the first 30 holes completed and assay results from 16 holes showing no significant results.
The results of the sterilisation programme will be analysed once all assays are received.
“The progress to date has confirmed the company's confidence that the North Royal Open Pit will become the fourth mine at the Norseman Gold Project,” the company said in the statement.
The forecast for the 2010/11 financial year remained at 105,000 to 110,000 ounces recovered at a cash cost of between A$670-730/oz.
The development of the North Royal open pit is expected to result in the existing Phoenix treatment plant operating at 100% capacity compared to the current level of around 50%.
This would allow grade optimisation through the mill and stockpiling, supporting Norseman’s medium production target of 140,000 ozpa (ounces per annum).
Back in late August, Norseman announced that its reserves rose 5% to 420,000 ounces of gold from 1.7 million tonnes at 7.7 grams of gold per tonne at its Western Australia mine, marking the third consecutive year it has increased the resource estimate for the project.
The resource base increased 3% to 3.8 Moz (million ounces) of gold from 21 Mt (million tonnes) at 5.3 g/t (grammes per tonne). Of the total reserves, 330,000 ounces of gold are located within the Bullen, Harlequin and OK Declines.
The North Royal Open Pit has historically produced 3.5 million tonnes of ore at a grade of 16 g/t for 1.8 million ounces of gold from both open pit and underground mining.
Norseman has been working on converting the current 600,000 ounce resource to reserve.