Norseman Gold (LON:NGL, ASX:NGX) today appointed Kevin Maloney as executive chairman cementing closer ties with the Australian entrepreneur’s Tulla Resources.
As well as being a significant shareholder in the AIM-listed group, Tulla has also taken over the running of the Norseman Mine, Australia’s longest continuously operating gold operation.
Maloney created and built The MAC Services Group, a mining services company, which he sold for $650 million in 2010, and has reinvested the proceeds from his 52 per cent stake in a portfolio of assets which span mining (mainly copper and gold), transportation and IT.
He also owns the Segenhoe racehorse stud, which AIMs to emulate the bloodstock success of John Magnier and his Coolmore operation in Ireland.
Whether it is breeding the next Derby winner, or reviving the fortunes of a former thoroughbred gold mine, the recipe for success is the same, according to Maloney.
“It is a process,” he explained in an interview with Proactive Investors. “You can’t get away from the fact that if you do it right, get the process right, you won’t run into a lot of surprises.”
The Tulla team is in the throes of putting the right processes in place at Norseman.
In doing so it is recruiting the best qualified senior personnel and is acquiring the correct equipment to do a proper job.
This attention to detail is vitally important as it will give Tulla a granular understanding of the underground and open pit operations.
This is something the previous management lacked.
As a result, Norseman had a penchant for surprises – both in terms of gold grade and production – and not the good, positive variety.
Maloney, however, is not unduly and openly critical of the previous regime.
He is focused on the here and now – getting the production up to 100-120,000 ounces a year and costs below the magic $1,000 an ounce.
And judging from the last investor update, team Tulla is enjoying some success.
The production target is achievable in the next year, Maloney said, while Norseman is on course to hit its cost target in the “next three months or so”.
Passing these two milestones creates a hugely cash generative operation. However, this is not the ultimate goal.
The project, which covers 2,360 square kilometres of Western Australia’s Norseman-Wiluna greenstone belt, ultimately has the potential to be a 3-400,000 ounce a year gold producer, Maloney reckons.
When, slightly incredulous, I question this assertion, he produces a map of the Norseman area peppered with former producing pits whose potential has barely been tapped by previous excavation.
In fact, he reveals there is around 80 years-worth of data that has been digitized that requires sifting to unearth multiple potential targets.
The plan after doing this is to find an initial two new potential open pits that would run alongside an underground mine, giving the balanced mix of production.
The current resource of 3.4 million ounces hints at the huge potential of the Norseman ground.
“We are all about the future. We are not going to worry unduly about the past,” said Maloney.
“Norseman has one of the best futures as a major gold producing area.
“The reason for this is it has traditionally been an underground mine. But it has significant open-cut potential.
“It has an announced resource in excess of 3 million ounces. To prove up 3 million ounces you have to go out and spend tens of millions of dollars.
“The other thing that attracted me to this company, notwithstanding the problems it has had, is the fact it has over 80 years of mining history that has all been recorded and digitised. It is all earmarked and catalogued.
“I can pull up any bit of information I want and it is littered with unfinished exploration projects.”
He points by way of example to the Scotia deposit, which produced a quarter of a million ounces, but still has the equivalent resource still in ground.
“We could go in there and prove up extra resources.
"That then becomes a major mining area. And that’s just one little log.”
However, it requires a well defined strategy to exploit these eight decades of records to their full potential. Again it is a case of having the right process in place.
“We need a study manager and a good exploration geologist,” said Maloney.
“We require the right people to go in there and sift through the information, prioritise the targets and then work on it to put together a strategy and a plan to turn it into a 300-400,000 ounce operation."