The future of Normandy

Terry Smith, Resident Manager,
Normandy Gold Pty Ltd

We're looking at producing 105,000 ounces this financial year - that's down from 130,000 last year; 9500 tonnes of copper mineral - that's down from 22,000 tonnes last year and this all reflects the diminishing size of our mines.
This metal production will provide a gross revenue on spot prices of 64 million dollars and we'll be spending 4.3 million dollars of that on exploration in the region. We've been spending 4.3 million on average for the last ten years in this region and that's all funded out of our cash flows here in Tennant Creek.
We'll be spending 2.3 million dollars cleaning up a lot of the historical mining environment that's been left to us and that will certainly be ongoing for the next five or ten years until it's completley cleaned up.
Around Tennant Creek 2.7 million dollars will be spent this year, the main idea here is to find something close to our operations so we can continue if possible, to process ore. We haven't been successful yet, we've still got a lot of that money to go, about 2 million dollars to spend yet and the key targets are Queen of Sheba at Gecko and also we're still looking at White Devil. We hope to find something there to keep us going but time is running out.
We're doing a preliminary study at the Rover field but we must remember that if we did find something at Rover it certainly wouldn't be in the short term, we're looking at probably five to ten years out before we'd ever produce gold or copper from there.
The Peko tailings is an historical tailings dam with 3.6 million tonnes. That's got a lot of metal in it, it's also got a lot of processing cost attached to it and a lot of rehabilitation cost attached to it. We are still studying whether we could reprocess that material and possibly make some profit out of that and in that way, complete the rehabilitation as well. Also, the Peko mine which was mined between 1930 and 1970. There's some clean up material there that we will be able to process and there's some other material which we've got stockpiled out at Warrego which we'll process in the next twelve months or so.
They will only provide short term employment and cash flows for us while we continue to explore.
Our budget and cash expenditure for this financial year is 31 million, in 1996/97 it was 66 million and last financial year it was 66.9 million. So it's virtually been halved this financial year as our operations retract. A good example of where we spend our money is power and water, 12.9% plus 11.4%, around 25% of our expenditure is on fuel or energy and that fuel is for generating energy at Warrego. So our energy costs are 25% of our gross expenditures and we're also paying some of the highest energy costs in Australia, well in excess of what they're paying in Tasmania or New South Wales, so that's something that needs to be addressed in the future. That 25% is virtually fixed, so if we really wanted to cut costs, we can only address the other 75%.
When I say local expenditure, I mean within the Northern Territory, 16.8 million dollars and a major proportion of that, 9.7 million dollars, is payroll. With the downsizing of our operations due to exhaustion of our resources, a lot of that is going to disappear. By the close of our mines in September 1999, we'll be down to a work force of around 25, from about 290 at the moment.
Just looking again at the local effect, local supplies from around Tennant Creek is 3.9 million dollars and a major proportion of that is for power and water, that's basically where we're spending all our money, the other money goes on local businesses.
Last financial year we spent 340,000 dollars on community projects and the majority of that went ot the Government Stamp Battery, which Normandy has been supporting now for over ten years and certainly hopes to turn that into a major heritage item for the sake of Tennant Creek's future. If mining does cease, at least there'll be the tourism industry here, that reflects a little on the mining history which is certainly a very valuable piece of Australian heritage.
So in summing up 1998/99 is our final full budget year, we're looking at closure of Warrego tailings reprocessing in the next month or so and the Geko mine around about Christmas, White Devil around about 12 months time.
That will probably generate the major contraction in the community with less employment and less purchase of goods and services.
There'll be a major push to complete rehabilitation, spending 2.3 million this year and that will continue over the next five to ten years with monitoring programs and also a lot of clean up programs around the major sites suh as Warrego, Geko and White Devil.
We believe we have very good exploration ground. I've been speaking to our geologists and they seem to think we have over 90% of the best ground in the Tennant Creek field, I think others would probably dispute that! But they're confident and we're hanging our hats on our Rover field. We thank the Aboriginal people for coming to an agreement with us and we'll certainly be getting on with that either this financial year or the next.
Normandy has a strong position in Tennant Creek, we've got infrastructure, we've got good exploration ground, knowledge of the area and I think we've got the support of the local community and I am certainly sure that mining will come back and will come back very strongly.