Executive Summary

Noreseman Gold PLC (LON:NGL) is a gold exploration and production company based in Western Australia. The company has produced more than 5.5m ounces of gold and it has been in operation for over 65 years. It is currently producing approximately 80,000 ounces of gold per annum from two producing mines in the Norseman field. The company also has a number of other targets that are at an advanced stage of exploration and that are highly prospective. Noresman Gold earned revenue of AUD$96.7m in 2009, and it made a profit of AUD$17.3m.

Company History

Norseman's phoenix logo is rather appropriate, with the company having risen from the ashes of bankruptcy & near bankruptcy twice in the recent past. The first time when the operating subsidiary, Central Norseman Gold Corporation Ltd (CNGC)  was bought from the administrators of Croesus Mining NL in 2007 by Davos Resources Plc (Davos Resources was subsequently renamed Norseman Gold Plc); the second time in the second half of 2008 when rising costs and a weak gold price forced Norseman's directors to make loans to the company, so as to keep it afloat. The company has progressed significantly since then, in the light of a stronger gold price and lower costs, and is currently on a much firmer financial footing.

CNGC has produced 5.5million oz of gold over a period of more than 65 years. It was bought from WMC by Croesus in 2002.

Production history since NGL's takeoverof CNGC  has been as follows:

Q/E oz
30/09/2007 20,472
31/12/2007 16,552
31/03/2008 19,088
30/06/2008 21,116
30/09/2008 19,007
31/12/2008 19,831
31/03/2009 19,902
30/06/2009 22,013

2009 has proved highly profitable so far [1] . Cashflow from this, together with a placing has enabled Norseman:

  1. To buy back its convertible notes from a distressed seller at a 33% discount to face value, thus eliminating debt.
  2. Finance mine development and exploration activities for the foreseeable futre
  3. List on the ASX exchange, in addition to AIM. A further A$9m was subscribed in this listing, boosting the cash position further. 25th June 2009 was the first day of dealings (ticker ASX:NGX). The dual listing should allow UK investors to hold the shares in an ISA

[2]

[3]

Current Events

 The following issues are key drivers of Norseman's valuation:

  1. The price of gold in A$. A significant part of NGL's input costs are incurred in…

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