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Norseman Gold in talks with potential strategic partner, reaches target ore at North Royal pit

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Norseman Gold (LON:NGL, ASX:NGL) said the operational review by newly appointed chairman David Steinepreis has already identified areas which will improve its financial performance and announced it is in talks with a potential strategic partner who are looking to take an active role in the development of the group.

The gold miner which operates the Norseman mine in Western Australia, said it has reached the targeted hard rock ore at the North Royal open pit, which means more North Royal ore will be able to be added to the overall treatment plant feed.   

This should result in an increase in the ounces produced as more tonnes will be able to be treated.  The blend ratio has already been increased from around 20 percent of North Royal in the blend up to around 40 percent. 

With a direct focus on cost, the company has decided to suspend mining at the OK Decline in order to reduce expenditure and focus on the areas of the mine that are performing and/or producing profitable ounces. 

Manpower will now be transferred to the other areas of operation which should alleviate the reported manpower issues. 

A detailed review of both the Bullen and Harlequin underground mines, and how production  and profitability at these centres can be improved is also on-going and the board will again update the market on this in the New Year, which will include guidance on gold production for the full year.

The potential partner mentioned above has experience in operating at Norseman, particularly the Harlequin and Bullen mines and therefore understand the ore bodies and their potential, the company said.

Chairman Steinepreis said: "The cost of production per ounce has been the main issue at Norsemen due to the low number of ounces being produced and through the review we continue to address this.  While the decision to suspend mining at the OK Decline is regrettable, I believe this will have an immediate positive effect on the company's profitability.

“Our aim now is to focus primarily on improving the profitability of Harlequin and the Bullen underground mines, and North Royal, which I believe will translate into higher grade production, cost efficiencies and lower overall production costs. 
 
“We have interest from third parties regarding a management contract and discussions are on-going.   The fact that we have been approached by a group that understands the ore bodies should provide increased confidence of Norseman Gold's potential," he added.

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