NGL28 Feb 2011 08:20
CHAIRMAN AND MANAGING DIRECTOR'S STATEMENT
The interim financial results of the Group represent the results of the Norseman Operations for the period 1 July 2010 to 31 December 2010. During this period in which the operations focussed on the development of the two new mines, the Group produced 23,391 ounces of gold, which generated a loss after tax of AUD$0.8 million.
The average gold price achieved during the 6 months period was AUD$1,369 per ounce.
Despite the low production performance, some major milestones were achieved during the half year in pursuit of the Company's "fill the mill" strategy.
Capital and normal development at both Harlequin and Bullen achieved record levels and is the main reason behind the general drop in mined grade during the half. These excellent levels of development will enable more working areas to be opened up for stoping in the future and provide more stability in terms of production.
At the OK Decline rehabilitation and development continued, and the mine fired the first production ore stopes in early 2011. The reserve first used to justify reopening this mine has now been increased with the addition of the Star of Erin and other reserve delineation. Now that the mine has begun stoping, it is anticipated production will increase steadily in the coming months.
Dewatering at the North Royal Open Pit has continued to the point where mining activities were able to be commenced in December. Dewatering of the bottom of the open pit is continuing in conjunction with the commencement of mining. An earthmoving contractor was appointed, as was a drill and blast contractor. In early 2011, the first low grade ore was extracted and taken to the ROM pad for processing.
Ore generated from these sources have enabled the mill to recommence full time, seven days-a-week milling operations. As more ore is generated, stockpiles will be created which will, in turn, enable blending of different ores through the processing plant to achieve optimal output and stabilise gold production.
Production for the half year was below the Group's target from the Bullen and Harlequin Declines. Following the receipt of results from grade control drilling in the North Royal open pit, a review of the current full year production has been carried out, and the full year forecast has been revised down to 65,000 ounces.
Although cash costs per ounce increased above targeted levels during the half, this was a reflection of ounces produced from lower grade ore as opposed to increasing total costs. The Group managed to keep a tight rein on costs, and total costs were held to within budget. The Group remains focussed on the productivity and grade of the operating mines to ensure that the improvement in performance and profitability continues. The Group has now shifted from a development focus to production in the new year with the emphasis on returning the operations to profitab
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