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SIM
SIIF
SIM - Simmer & Jack Mines Limited - Simmers to invest R300-Million in two new
Gold Expansion Projects
SIMMER & JACK MINES, LIMITED
Share code: SIM
ISIN: ZAE000006722
SIMMERS TO INVEST R300-MILLION IN TWO NEW GOLD EXPANSION PROJECTS
Simmer & Jack Mines, Limited (Simmers: JSE:SIM) announced today that it had
received board approval to proceed with a R300-million capital programme to re-
open the high grade Five Shaft at its Buffelsfontein operation in the North West
province and to accelerate the exploration and development of the heap leach
potential at its Mpumalanga-based subsidiaries, TGME Limited (TGME) and Sabie
Mines.
"Simmers is going through a period of tremendous growth and additional funding
is required to extract the value from two accretive projects where we expect to
generate 700 000 reserve ounces at a capital cost of $33 per ounce and a million
ounces of resources at a capital cost of $18 per ounce," said Simmers chief
executive, Gordon Miller.
The company has considered various funding options and anticipates a private
placement of shares under the general authority granted to the board by
shareholders at the Annual General Meeting. This process will commence next
week.
Buffelsfontein
The first project involves the re-opening of the high-grade Number Five Shaft at
Buffelsfontein. An independent NI 43-101 and SAMREC compliant technical report
has confirmed the valuation of Buffelsfontein, including Five Shaft as follows:
an NPV for Buffels of R2.372 billion using a nominal discount rate of 15.23%, an
average life of mine gold price of US$629 per ounce and an exchange rate of
R7.51 to the US dollar.
Rendered inaccessible following a seismic event in March 2005, rehabilitation of
the shaft has been underway since September 2006 and 80% of the rehabilitation
on the Main Shaft barrel has already been completed. The project is expected to
cost R170-million and will add 700 000 reserve ounces at a capital cost of US$33
per reserve ounce. Production at Five Shaft will commence in the current
financial year and is expected to deliver 12 000 ounces by March 2008 at a cash
cost of US$378 per ounce. The Five Shaft project will result in:
* A 5% increase in the overall Life of Mine (LOM) grade
* An improvement in peak production forecast of 254 000 ounces for *
Buffelsfontein by financial year 2012/ 13 to 318 000 ounces by F2014/15
* An 11.29% increase in total ounces in Life of Mine, from 4.544 million
ounces to 5.057 million ounces
Miller said that Five Shaft would go a long way to improving flexibility in the
future.
"This flexibility will mitigate against the risks of unexpected loss of face
length that has negatively impacted on output and unit costs during the last
five months at Buffelsfontein. Fortunately our increased development and opening
up rates have contributed to the restoration of the required face length."
The independent technical report on Buffelsfontein, incorporating the inclusion
of Five Shaft, has been released and can be found on the Simmers website -
www.simmers.co.za
Mpumalanga
The second project is as a result of a strategic decision to re-focus capital
expenditure from underground projects to higher-return, lower-risk surface
mining opportunities.
A detailed conceptual study conducted over the past two years has outlined the
potential to define 1-million ounces of resources and 733 000 ounces of reserves
by end 2008 at an estimated feasibility cost of R130 million. Should the
feasibility prove successful, production could ramp up to a rate of 250 000
ounces per annum by F2011 at a total capital and operating cost of $240 per
ounce, assuming an exchange rate of R7.4 to the US$.
The funds will be applied in three phases:
* Accelerate and complete the drilling programme to allow the company to
evaluate the resource potential of the surface deposits;
* Complete a bankable feasibility study based on those drill results by March
2008
* Construction of new heap leach pads to confirm cost and metallurgical
parameters for the feasibility study.
The new heap leach pads will be in addition to the company`s first test heap
leach pad constructed at Elandsdrift which will begin producing gold in November
2007. This is later than originally anticipated due to permitting delays.
Miller said that although the project had been delayed by a few months, it was
now much larger with better margins due to improved confidence in the cost
estimates, the sheer scale of the project and improved metallurgical test
results.
He said that while new underground projects in Mpumalanga had been deferred in
favour of surface mining, the existing underground mine at Frankfort would
continue.
"Frankfort is a highly mechanised mine capable of producing high volumes of ore
but recovery rates have been disappointing owing to the higher than expected
percentage of refractory ore. For this reason, funding has also been earmarked
to improve plant recoveries from their current 45 % to 70%, which will take
effect by December 2007. The anticipated improved recovery will yield an
additional 22.5kg per month, which translates into additional revenue of R3.6
million per month, or R43.2 million per annum. Frankfort plans to build up to 25
000 ounces by 2010.
A detailed presentation on the new projects can be found on the Simmers website.
Please go to www.simmers.co.za and under Investor Information, click on "Adding
Value through Gold".
A second detailed presentation showing the metrics of the conceptual Mpumalanga
project is also on the Simmers website under Investor Information entitled.
"Accelerated exploration and heap leach potential at TGME in Mpumalanga." This
conceptual presentation can be read in conjunction with the Phase 1 and 1a
geological reports on the Molototse Valley, under the report section of the
website.
18 MAY 2007
FOR FURTHER INFORMATION PLEASE CALL GAIL STRAUSS ON 084 777 4060
Date: 18/05/2007 09:50:01 Produced by the JSE SENS Department.
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