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Western Australia operating miner Norseman Gold (AIM: NGL, ASX: NGX) concluded the 2008/09 campaign with a strong set of full year results today, posting a A$20.4 million maiden net profit off higher revenues, while operational costs were pushed below the bottom range of the forecast.


Revenues were up 36% year on year to A$96.7 million, while last year’s losses of A$8.7 million turned into a A$22.2 million pre-tax profit.


The increase in revenues was due to a 4.6% improvement in gold output from its principal asset Norseman Gold Project in Australia to 80,753 ounces, while gold price rose to an average A$1,179 per ounce, compared to last year’s A$905. The company earlier reported it was ahead of its production targets, capping the year off with a record quarterly output from the Norseman mine.


The profits were helped by lower operating costs, which were brought down to A$715 per ounce, beating the projected minimum of A$720.


On the operational side, Norseman said resource drilling had commenced on the company’s OK decline and results were expected in the first half of the next financial year, while the pumping infrastructure at North Royal had been installed and commissioned and pumping was anticipated to get started this month.


Production from one or both these projects is expected to commence in the next financial year, following its “fill the mill” strategy to start a third mine and fill its under utilized Phoenix processing plant to full capacity.


The company plans to increase the reserves at the Norseman mine through exploration drilling from the current 310,000 ounces to 500,000 and ultimately 750,000 ounces over the next two years, seeking to expand the mine life to 10 years from the current minimum of five years.


Norseman said it was confident about its prospects for the coming year and targeted acquisitions, bolstered by a balance sheet of A$68 million and cash balances of A$32.6 million after generating net cash of A$25.5 million this year.


“Norseman’s gold production remains un-hedged, and its balance sheet is the strongest it has been since acquiring the Norseman Gold Project in May 2007. Furthermore, the Company will commence to explore other opportunities to increase its production profile by exploration, merger or acquisition, making full use of its mining expertise, cash position and strong balance sheet,” said Chairman Vince Pendal and Chief Executive Barry Cahill, commenting on the full year results.


Progress at its Norseman mine in Australia reported over the past financial year helped the company’s stock value to a more than threefold increase to 37p per share from about 10p a year ago.

The full year results further improved investor confidence, sending Norseman up 3.5% in early trade.

http://www.proactiveinvestors.co.uk/companies/news/7689/norseman-gold-posts-a204-million-maiden-profit-eyes-acquisitions-7689.html