News & Analysis

Norseman Gold Plc (NGL: AIM) review and analysis

By PSQ Analytics

Norseman Gold Plc is a holding company, which along with its subsidiaries (together called “the Group”) is engaged in gold production and mineral exploration activities. The Group’s principal asset is its Norseman Gold Project located in Western Australia, held via its wholly-owned subsidiary Central Norseman Gold Corporation Limited.

Headquartered in London, UK, Norseman Gold primarily operates in Australia and employs around 216 people. The Company was listed on AIM in April 2007 and on the ASX on 25 June 2009.

The Norseman Project

The Norseman project is located 725 km east of Perth, Western Australia, covering a 1,614 sq km area centred on the Norseman Township. The project is one of the longest (over 65 years) continuously running gold mining operations in Australia, and has produced in excess of 5.5 mn oz of gold up to June 2008. The gold production from the Norseman project totalled 80,753 oz in FY 2009. The Group is focusing on exploiting the low grade gold reserves at the Norseman site, to capitalise on the currently escalated gold prices. This resulted in an increase in the per oz operational cost of gold produced at the site in FY 2010.

As of 31 March 2009, proved and probable ore reserves from the Norseman Project were 0.4 mn oz of gold (1.4 mn tonnes at a grade of 8.9g/t of gold), an increase of 29% from a year earlier.

Pre-development projects

Three of Norseman Gold's most advanced development opportunities are OK Decline, North Royal and Crown Reef:

– OK Decline: The Group recently approved the development of OK Decline, adding a third mine to the Norseman Gold Project. The initial life of the mine is two years, based on OK Decline reserves of 57,000 oz of gold. The company initially expects to mine 5,000 ounces and 30,000 oz in 2009-10 and 2010-11, respectively, from the Star of Erin, which is one of the three mineralised structures of OK Decline.

– North Royal: The Group has initiated pit dewatering and surface diamond drilling at North Royal. A pit is expected to become operational by the end of 2010.

– Crown Reef: Historically, the Crown Reef mine was a major producer within the field. However, it is currently inactive. The Group plans to start an underground drill program from June 2010 to prove up the resources.