14/03/2012 - 10:46

Norton aims to lower costs

14/03/2012 - 10:46

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Norton aims to lower costs

GOLD miner Norton Gold Fields is aiming to reduce costs at its Paddington operations near Kalgoorlie during the second half of the 2012 financial year to better compete with its low-cash peers.

The Brisbane-based company’s Goldfields operations suffer from some of the highest cash costs of Western Australia’s top-producing gold mines.

Paddington recorded costs of $A968 an ounce in the 2011 fiscal period when 153,000oz were produced from the operations.

Out of the state’s top 15 producing companies, only Navigator Resources had higher cash costs of $A1,135 an ounce at its Bronzewing mine near Leinster.

This compares unfavourably against peers such as Ramelius Resources, which delivered costs of $A482 from the 101,000oz produced at its Wattle Dam mine near Kambalda. 

WA’s top-producing gold mine, Kalgoorlie’s Super Pit joint venture between Newmont Mining and Barrick Gold, produced 760,000oz at about $US550 an ounce.

Since the end of 2011, Norton’s cash costs have grown further, to $A1,180 an ounce in the quarter to December 31.

Despite this, the company has provided guidance of $A970 an ounce for 2012 as it targets output of 150,000oz for the 12-month period.

Managing director Andre Labuschagne said the spike in costs was caused by the expenses related to pre-stripping at the Blue Gums project within Paddington, along with additional haulage costs.

However, he said the Blue Gums mine was now in production and the additional higher-grade output from the operation would work to lower the company’s costs in this half.

“In the December quarter our grades were lower because we did not have the higher grades from Blue Gums in the mill yet,” Mr Labuschagne told WA Business News.

“So we will ramp up the grades through Blue Gums and we expect cash costs for these six months to be in the $900s.”

Blue Gums, which is expected to have a mine life of around 12 months, is one of several small projects Norton has in a development pipeline at Paddington that will complement its primary deposit, Navajo Chief.

Meanwhile, Mr Labuschagne said Norton remained on the lookout for acquisitions and was committing $37 million for exploration over the next two years as part of its growth program.

He said Norton would not necessarily add to its WA portfolio, but that the company was always assessing opportunities in the state.

The company has looked at the Bullant mine, recently placed on care and maintenance by Kalgoorlie Mining Company, because of its close proximity to the Paddington mill, but Mr Labuschagne said it was focused more on acquiring larger assets.

“There are a whole host of companies around us both big and small; some are in the market (to sell) and some just make sense for us,” he said.

“It’s always competitive with the higher gold price and we all think we are undervalued – it makes transactions more difficult.”

 

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