Norseman Gold (LON:NGL, ASX:NGX) posted an increased operating loss in the quarter ended December, but said new ore sources at OK Decline and the North Royal Open Pit are poised to make a marked contribution in the coming three months.
NGL reported a loss before interest and tax of A$5.4 million compared with a A$1.1 million shortfall in the same period last year.
Production in the period fell to 11.162 ounces of gold from 12,229 previously as the cash costs of the operation at the historic mine in Western Australia rose 28 per cent to A$1,342.
“(We) remain committed to the "fill the mill" strategy and have made significant progress in the development of two new mines that will ultimately result in the company achieving its forecast 140,000 ounces per annum,” the company said in stock exchange statement.
The Norseman mine in Western Australia is the country’s longest continuously running gold mining operation. In recent years the company has focused on new development project to find new resources and increase production, helping it give the ageing mine a new lease of life.
This progress has come at a price. NGL has made a significant and ongoing investment in these developments, in the last three months alone it has spent A$14.6 million on exploration, mine development and equipment.
A lot of progress has been made with the help of this investment and now NGL is ready to start reaping the rewards.
The large Norseman mining area encompasses a number of underground gold mines - Bullen, Harlequin and OK Decline. The North Royal open pit will be the fourth mining operation on the Norseman site.
At the OK Decline - the most recent addition to the underground operation - Norseman has now begun production from stoping and it is expected to increase during the March 2011 quarter. The company began mining from North Royal in December and the first parcel of low-grade ore was extracted in earlier this month.
The company adds: “(We are) confident that there will be a production improvement during the March 2011 quarter that will reflect the introduction of these new ore sources to the treatment plant.
“(We) expect that full time milling will commence in February 2011, initially with low-grade ore and then higher grade ore as the production increases and lower grade material is able to be stockpiled.”
Aside from NGL’s two new mines it has also invested in exploration, to find new resources in and around the Norseman mine. The key exploration targets include Bullen West, the Star of Erin reef and the Butterfly Deeps.