Norseman gold output down in Sept quarter but guidance confirmed

Accelerated development led to a below forecast gold output from Norseman in the September quarter but overall production guidance for year maintained.

LONDON - 

Western Australia operating Norseman Gold (AIM & ASX: NGL) has achieved record capital and ore development levels, posting a 50% quarter on quarter increase in development tonnes, however production was below forecast as a result.

Production from the Norseman Gold Project for the three months and nine months to 30 September amounted to 16,160 oz (ounces) and 22,103 oz respectively. Despite the lower than expected quarterly numbers, Norseman reaffirmed its production and cost guidance for the Bullen and Harlequin declines at the project, expecting the following three quarter to make up for the losses.

The declines in production this quarter were due to the focus on development to ensure drilling access to drill positions and open up future working areas, create flexibility in working declines and support forecast production in upcoming quarters.

Norseman has spent a total A$6.6 million on exploration, capitalized mine development and equipment during the quarter, while the EBIT (earnings before interest and tax) from the Norseman project amounted to A$0.3 million. The company's cash balance at the end of the period stood at A$31.8 million.

Lower production volumes resulted in an increase in operating costs, which amounted to A$900 per oz of gold recovered, which was above the forecast range of between A$720 and A$780, as well as the nine month average of A$636 per oz.

Norseman announced the commencement of the OK Decline mine at the Norseman Gold Project yesterday, which led it to up the full year production guidance to between 80,000 to 85,000 oz of gold from the previous forecast of 75,000 to 80,000 oz for this year, also increasing the guidance for the next year to 105,000 to 110,000 oz.

The company also said that diamond drilling at the Harlequin decline has returned significant results including intersections of 1.1m (metre) at 85.5 g/t (grammes per tonne) and 0.3m at 44.5 g/t gold.

Published courtesy of Proactive Investors - www.proactiveinvestors.co.uk

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