| Mon 26 Nov 2007, 7:05 | | SIM - Simmers - Unaudited Abridged Consolidated In |
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SIM
SIIF
SIM - Simmers - Unaudited Abridged Consolidated Interim Results For The Six
Month Ended 30 September 2007
Simmer & Jack Mines, Limited
(Incorporated in the Republic of South Africa)
(Registration number 1924/007778/06)
Share Code: SIM & ISIN: ZAE000006722
("Simmers" or "the Company" or "the Group")
ABRIDGED CONSOLIDATED INTERIM RESULTS
for the six month ended 30 September 2007 - unaudited
CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited Audited
six months six months twelve
months
as at as at as at
30 Sep 30 Sep 31 Mar
2007 2006 2007
Notes R`000 R`000 R`000
ASSETS
Non-current assets 1 534 261 492 133 751 670
Investment property 9 481 19 494 9 481
Property, plant and
equipment 2 1 351 794 352 484 591 256
Financial assets 13 283 10 458 13 276
Goodwill 3 7 415 - -
Environmental
rehabilitation trust 4 152 288 109 697 137 657
fund
Current assets 2 203 251 191 943 1 269 932
Inventories 5 44 888 16 430 30 852
Current tax receivable - - 145
Trade and other
receivables 6 106 891 68 184 75 105
Cash and cash 2 051 472 107 329 1 163 830
equivalents
Non-current assets held
for sale 1 033 6 733 6 170
3 738 545 690 809 2 027 772
EQUITY AND LIABILITIES
Equity capital and
accumulated loss 2 282 393 271 559 1 468 226
Share capital 829 520 457 054 474 109
Reserves 950 208 71 254 942 418
Accumulated loss (457 588) (259 063) (350 052)
Convertible debentures -
equity 7 327 489 - -
Minority interest 632 764 2 314 401 751
Non-current liabilities 1 180 669 336 078 393 177
Financial liabilities 8 157 555 152 584 159 505
Convertible debentures -
debt 7 684 951 - -
Other liabilities 86 157 499 -
Environmental
rehabilitation provision 9 252 006 182 995 233 672
Current liabilities 275 483 83 172 166 369
Trade and other payables 10 275 252 70 463 152 868
Financial liabilities 8 231 12 709 13 501
3 738 545 690 809 2 027 772
CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited
six months six months twelve
months
as at as at as at
30 Sep 30 Sep 31 Mar
2007 2006 2007
Notes R`000 R`000 R`000
Turnover 371 054 316 970 602 947
Cost of production (403 028) (301 038) (640 118)
(Loss)/Profit from
mining activities (31 974) 15 932 (37 171)
Other income 35 600 11 431 40 961
General administration
expenditure
and overheads (78 075) (32 340) (80 217)
Amortisation (22 514) (18 385) (45 320)
Share option cost (25 540) (44 893) (62 343)
Loss before finance
charges, interest and
dividends 13 (122 503) (68 255) (184 090)
Fair value adjustment on
loan - (5 367) (20 946)
Gains on disposal of non-
current assets
held for sale - - 2 591
Dividends received 2 615 - -
Interest received 73 150 2 442 36 135
Finance charges 14 (60 424) (27 552) (23 410)
Loss before taxes and
minority interest 16 (107 162) (98 732) (189 720)
Taxation (373) - (2)
Minority interest - - -
Loss for the period/year (107 535) (98 732) (189 722)
Attributable to:
Equity holders of the
parent (97 461) (96 709) (181 630)
Minority interest (10 074) (2 023) (8 092)
(107 535) (98 732) (189 722)
CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
six months six months twelve
months
as at as at as at
30 Sep 30 Sep 31 Mar
2007 2006 2007
R`000 R`000 R`000
Cash (absorbed by)/generated
from operations (30 758) (14 702) 72 492
Interest received 73 150 2 442 36 135
Taxation paid - - (147)
Finance charges (31 605) (9 423) (23 410)
Cash flows from/(to) operating
activities 10 787 (21 683) 85 070
Cash flows to investing
activities (501 877) (53 457) (240 301)
Cash flows from financing
activities 1 378 732 159 419 1 296 011
Net increase in cash and cash
equivalents 887 642 84 279 1 140 780
Cash and cash equivalents at
beginning of year 1 163 830 23 050 23 050
Cash and cash equivalents at
end of period/year 2 051 472 107 329 1 163 830
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Shares in Non-
Share Share Simmers` distributable
capital premium Share reserve
Trust
R`000 R`000 R`000 R`000
Balance at 1 April 2006 17 453 330 (39 551) 26 361
971
Net loss for the six months - - - -
Issue of shares for cash 2 047 150 - -
723
Share issue costs written
off against share premium - (5 439) - -
Share options to be - 3 232 (3 232) -
allocated
Treasury shares movement 322 32 332 (31 804) -
Share-based payments - - - 44 893
Balance as at 30 September
2006 19 822 511 819 (74 587) 71 254
Net loss for the six months - - - -
Share issue costs written
off against share premium - (2 851) - -
Marked-to-market reserve - - - 1 502 370
Excess on common control
acquisition - - - (635 096)
Share options to be - (3 3 232 -
allocated 232)
Minority interest movement - - - -
Treasury shares movement 278 (1 21 098 -
470)
Valuation gain on available-
for-sale investment - - - 3 158
Share-based payments - - - 732
Balance as at 31 March 2007 20 100 504 (50 257) 942 418
266
Net loss for the six months - - - -
Issue of shares for cash 454 369 - -
901
Share issue costs written
off against share premium - (14 - -
944)
Net increase in convertible
debenture - equity portion - - - -
Treasury shares movement (65) (4 4 718 -
653)
Net movement in reserves - - - 7 790
Minority interest movement - - - -
Balance as at 30 September
2007 20 489 854 570 (45 539) 950 208
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Convertible
Accumulated debentures Minority
loss - equity interest Total
R`000 R`000 R`000 R`000
Balance at 1 April 2006 (160 331) - 2 314 177 217
Net loss for the six months (98 732) - - (98 732)
Issue of shares for cash - - - 152 770
Share issue costs written
off against share premium - - - (5 439)
Share options to be - - - -
allocated
Treasury shares movement - - - 850
Share-based payments - - - 44 893
Balance as at 30 September (259 063) - 2 314 271 559
2006
Net loss for the six months (82 898) - (8 092) (90 990)
Share issue costs written
off against share premium - - - (2 851)
Marked-to-market reserve - - - 1 502
370
Excess on common control
acquisition - - - (635
096)
Share options to be - - - -
allocated
Minority interest movement (8 092) - 407 530 399 438
Treasury shares movement - - - 19 906
Valuation gain on available-
for-sale investment - - - 3 158
Share-based payments - - - 732
Balance as at 31 March 2007 (350 053) - 401 752 1 468
226
Net loss for the six months (107 535) - - (107
535)
Issue of shares for cash - - - 370 355
Share issue costs written
off against share premium - - - (14 944)
Net increase in convertible
debenture - equity portion - 327 489 - 327 489
Treasury shares movement - - - -
Net movement in reserves - - - 7 790
Minority interest movement - - 231 012 231 012
Balance as at 30 September (457 588) 327 489 632 764 2 282
2007 393
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed financial statements for the interim period have been
prepared using accounting policies consistent with International Financial
Reporting Standards (IFRS) and in accordance with International Accounting
Standards (IAS) 34: Interim Financial Reporting. The principal accounting
policies used in preparing the results are consistent with those applied in
the annual financial statements for the year ended 31 March 2007.
2 PROPERTY, PLANT AND EQUIPMENT
Opening Additions Additions through Fair value
Balance acquisitions adjustments
Reconciliation R`000 R`000 R`000 R`000
30 September
2007
Land and
building 13 425 8 180 - 14 961
Plant and
equipment 127 675 181 290 9 336 27 556
Furniture and
fixtures 4 457 3 642 37 45
Motor vehicles 2 062 2 630 - -
Mining assets 351 508 132 969 - 231 406
Computer
equipment and
software 3 070 2 935 269 -
Development
and infra- 53 949 123 264 28 835 -
structure
Mining rights 2 178 409 - -
Decommissionin
g asset 17 808 2 - -
Exploration
costs 15 124 17 450 - -
591 256 472 772 38 477 273 968
Table continues:.
Disposals Depreciation Total
and impairment
Reconciliation 30 September R`000 R`000 R`000
2007
Land and building
- (173) 36 393
Plant and equipment
- (2 439) 343 418
Furniture and fixtures
- (1 207) 6 974
Motor vehicles - (369) 4 323
Mining assets (2 163) (16 441) 697 279
Computer equipment and
software
- (997) 5 277
Development and infra-
structure - (889) 205 159
Mining rights - - 2 587
Decommissioning asset
- - 17 810
Exploration costs
- - 32 574
(2 163) (22 515) 1 351 794
Additions Depreciatio
Opening through n
balance Addition acquisition and Total
s s impairment
Reconciliation - R`000 R`000 R`000 R`000 R`000
30 September 2006
Land and 7 383 - - (660) 6 723
buildings
Plant and
equipment 39 800 3 942 - (1 024) 42 718
Furniture and
fixtures 2 320 2 905 - (403) 4 822
Motor vehicles 49 181 - (18) 212
Mining assets 207 394 15 187 - (7 788) 214 793
Computer
equipment and 1 000 516 - (441) 1 075
software
Development and
infrastructure 35 029 47 168 - (8 051) 74 146
Mining rights 820 296 - - 1 116
Exploration costs 4 109 2 770 - - 6 879
297 904 72 965 - (18 385) 352 484
Depreciation
Opening and
balance Additions Disposals impairment Total
Reconciliation - R`000 R`000 R`000 R`000 R`000
31 March 2007
Land and 7 383 6 042 - - 13 425
buildings
Plant and
equipment 39 800 91 308 - (3 433) 127 675
Furniture and
fixtures 2 320 3 275 - (1 138) 4 457
Motor vehicles 49 2 231 (79) (139) 2 062
Mining assets 207 174 808 - (30 694) 351 508
394
Computer
equipment and 1 000 3 402 - (1 332) 3 070
software
Development and
infrastructure 35 029 27 504 - (8 584) 53 949
Mining rights 820 1 358 - - 2 178
Decommissioning
asset - 17 808 - - 17 808
Exploration 4 109 11 015 - - 15 124
costs
297 338 751 (79) (45 320) 591 256
904
3 GOODWILL
First Uranium (Proprietary) Limited (FUSA) acquired Mine Waste Solutions
(Proprietary) Limited (MWS) and its operating subsidiary Chemwes
(Proprietary) Limited (Chemwes) during the year. An initial heads of
agreement for the transaction was signed on 2 April 2007 and the
transaction became effective on 6 June 2007 after all conditions precedent
were met. The purchase contract indicates the purchase consideration to be
R200 million, which will be settled through a fixed number (3 093 980) of
shares.
For the IFRS financial statements of FUSA, the cost of the purchase
consideration is determined as the fair value of the First Uranium shares
issued on the date that FUSA gains control, as well as the directly
attributable transaction costs (IFRS 3 par 24). The effective date of the
transaction when control passed was set as 6 June 2007, which is three days
after the last conditions precedent were met. At R82 a share, the closing
price on 6 June 2007, the 3 093 980 share were valued at R253 706 360.
For Canadian GAAP purposes the value of the shares at the announcement date
of the transaction, 2 April 2007, was used. The four-day weighted average
share price before the announcement date of CDN$11,797 was used. This
resulted in a fair value of R246 290 907. This GAAP difference resulted in
goodwill of R7 415 453 being recognised on consolidation in order to
reflect the purchase at the 2 April 2007 price.
First Uranium allocated the purchase price as follows:
Canadian
IFRS GAAP
ZAR`000 ZAR`000
Plant and equipment 82 201 82 201
Tailings for processing 241 097 241 097
Deferred tax liability (81 442) (81 442)
Net other assets 9 474 9 474
Total fair value of net assets acquired 251 330 251 330
Goodwill 7 415
Value of shares consideration 253 706 246 291
Capitalised transaction cost 5 039 5 039
Total consideration 258 745 251 330
Unaudited Unaudited Audited
six months six months twelve
months
as at 30 as at 30 as at 31
Sep Sep Mar
2007 2006 2007
R`000 R`000 R`000
152 288 109 697
4 ENVIRONMENTAL REHABILITATION TRUST FUND
The Group makes voluntary contributions to controlled funds that were
established to meet the cost of some of its decommissioning, restoration
and environmental rehabilitation liabilities. Interest earned on the
various funds is reflected in note 9. The use of these funds is limited to
the rehabilitation of the mines as directed by the trustees with Department
of Minerals and Energy (DME) approval.
The DME`s office in Pretoria could not provide detail on the movements on
the R117 million held in trust for Buffelsfontein Gold Mining Company under
their trusteeship.
137 657
5 INVENTORIES
Medical supplies 1 106 1 069 945
Consumable stores 14 909 10 440 9 359
Gold in process 19 562 4 921 5 045
Heap leach 3 596 - 8 164
Unprocessed ore 5 715 - 7 339
44 888 16 430 30 852
6 TRADE AND OTHER RECEIVABLES
Trade receivables 38 290 15 540 37 820
Prepayments 5 690 523 4 323
Deposits - 272 544
VAT 54 121 45 267 21 609
Other receivables 8 790 6 582 10 809
106 891 68 184 75 105
7 SENIOR UNSECURED CONVERTIBLE DEBENTURES
On 3 May 2007 First Uranium issued senior unsecured convertible debentures
(the debentures) in denominations of CDN$1 000 in the principal amount of
US$135 060 000 (CDN$150 000 000). The interest rate on the debentures is
4,25% per annum. The debentures pay interest semi-annually in arrears on 30
June and 31 December and have a maturity date of 30 June 2012. The
debentures are convertible at the option of the holder into common shares
at any time prior to the maturity date at an exchange price of CDN$16,42
per share.
The debentures may not be redeemed by the corporation prior to 30 June
2010. On or after 30 June 2010 and prior to the maturity date, the
debentures may be redeemed by the corporation, in whole or in part from
time to time, provided that the weighted average trading price of the
common shares on the TSX for the 20 consecutive trading days ending five
trading days prior to the date on which notice of redemption is provided is
at least 130% of the exchange price of CDN$16,42.
First Uranium has the option, subject to regulatory approval, to satisfy
its obligations to repay the principal amount of the debentures upon
redemption or at maturity by issuing and delivering that number of freely
tradable common shares obtained by dividing the principal amount of the
debentures by 95% of the weighted average trading price of the common
shares on the TSX for the twenty consecutive trading days ending five
trading days before the date fixed for the redemption or maturity.
The equity component of the debentures was valued on issuance at US$46 503
825 which is recorded as a separate component of shareholders` equity. The
conversion option was valued using the Black-Scholes pricing model with the
following assumptions: expected dividend yield 0%, expected volatility 56%,
risk-free interest rate 4,2% and expected life of five years.
The liability component of the debentures is being accreted such that the
liability at maturity will equal the gross proceeds of US$135 060 000
(CDN$150 000 000) less conversions. The amount accreted in the quarter
ended 30 September 2007 was US$3 307 858. The cost of issuing the
debentures amounted to US$4 498 778.
As at 30 September 2007 no portion of the debentures had been converted and
US$956 679 interest was paid on the debentures. Interest accrued on the
debentures for the quarter ended 30 September 2007 amounted to US$1 499
222.
8 FINANCIAL LIABILITIES
At fair value through profit
and loss
Loan payable to Aberdeen
International Incorporated
(Aberdeen) 157 555 152 584 159 505
Simmers entered into an agreement with Aberdeen, a Canadian exploration and
royalty company trading on TSX, whereby Aberdeen provided a loan facility
of US$10 million to acquire Buffelsfontein.
The loan has a 3% coupon up to a gold price of US$400/oz and 2,5%
thereafter. In addition a Net Smelter Return (NSR) on Buffelsfontein`s gold
production is charged, which is linked to the price of gold ranging from
0,5% NSR at US$300/oz to a 4,75% NSR at gold prices of US$750/oz or higher.
Simmers has the option of extending the term of the loan for an additional
two years with a minimum repayment of 10% of the existing principal of the
loan at the time of the extension. Aberdeen has the option to convert the
debt into Simmers shares, subject to Simmers shareholders` approval, at
R0,80 per share after the first anniversary of the loan. The loan has a
three-year term.
The loan is secured by a bond over Buffelsfontein`s North Plant.
The loan, royalties and options have been fair valued, taking the following
into account:
- valuation date = 30 September 2007
- redemption date = 31 December 2008
- R/US$ exchange rate = 6.88
- share price = R5,67 as at 30 September 2007
- volatility = 90%
- dividend yield = 0%
- discount curves = US$ swap curve for $ cash flows and ZAR swap curve
for
R valuation (on 30 September 2007)
- lifetime of royalties = 20 years
- gold price = remains at current levels (such that the interest is
2,5%)
- long-term gold price = US$600
157 555 152 584 159 505
Held at amortised cost
Consolidated Mining Management Services Limited
The amount owing is unsecured,
bears no interest and has no
fixed term of repayment. 231 231 231
Loan payable to Lion Capital
Group AB (Lion Capital) - 12 478 13 270
The loan is unsecured, bears interest at the prime rate and is repayable
in the 2008 financial year. The loan is with a related party, Mr JP
Schumacher, who has an interest in Lion Capital and was a director of
Simmer and Jack as at 31 March 2007.
157 786 165 293 173 006
9 ENVIRONMENTAL REHABILITATION PROVISION
The Group has an obligation to incur restoration, rehabilitation and
environmental costs when environmental disturbance is caused by the
development or ongoing production of a mining property. A provision is
recognised at the present value of such costs.
Provision is also made for the present value of costs relating to the
decommissioning of the plant and other site preparation work.
It is anticipated that the cost of restoration and decommissioning will be
incurred over a period of more than 20 years.
The environmental rehabilitation provision of TGME, Buffelsfontein and Mine
Waste Solutions have been reviewed by GCS (Proprietary) Limited, a water,
environmental, engineering and science consultancy company.
The provisions are based on the estimated net cost for the respective
companies to rehabilitate their mines. On the assumption that third parties
will attend to the rehabilitation of the mines, the costs, after deducting
salvages, are estimated at:
- TGME and Buffelsfontein 261 000 292 000 261 000
- Ezulwini 39 000 - 39 000
- Mine Waste Solutions 19 378 - -
The environmental rehabilitation provision for Ezulwini has been reviewed
by Johan Fourie & Associates, a consulting environmental engineering
company.
Reconciliation of provision
Opening balance 233 672 182 995 182 995
Additional provision and
accretion expense 412 - 13 109
Rehabilitation costs (1 456) - -
Addition as a result of
acquisition of subsidiary 19 378 - 37 568
Total 252 006 182 995 233 672
Unaudited Unaudited Audited
six months six months twelve months
as at 30 Sep as at 30 Sep as at 31 Mar
2007 2006 2007
R`000 R`000 R`000
10 TRADE AND OTHER PAYABLES
VAT 3 070 1 406 2 238
Other payables - 12 728 22 600
Accrued salary-related 29 662 17 856 13 399
Accrued expenses and trade
payables 242 520 38 473 114 631
275 252 70 463 152 868
11 COMMITMENTS AND CONTINGENCIES
Contingencies
Guarantees in favour of 8 500 161 8 500
Eskom
Guarantees in favour of
Murray & Roberts
Cementation 10 000 - 10 000
Commitments
Authorised capital
expenditure
- Contracted 263 086 15 032 115 489
12 RELATED PARTIES AND RELATED-PARTY
TRANSACTIONS
Related-party transactions
MRS - management fee paid - 438 -
Horizon Blue Resources -
fees paid for geological
services rendered 19 917 5 344 15 277
HJ Fourie - fees paid for
environmental consulting
services rendered 956 258 1 285
Lion Capital - interest on
loan 237 478 1 270
Lion Capital - capital on 10 000 - -
loan
Housing loan to CEO of First
Uranium Corporation
(the loan was advanced
subsequent to the
end of the interim period)
6 978 - -
Key management compensation
Long-term benefits -
incentive scheme 7 745 38 106 38 315
13 LOSS FROM OPERATIONS
The loss from operations is
stated after accounting for
the following:
Impairment on property,
plant and equipment - - 19 385
Profit on sale of non-
current assets held for sale - - (2 591)
Depreciation on property,
plant and equipment 22 514 18 385 25 935
Employee cost - including
share option cost 128 778 13 336 95 418
Operating lease charges
Premises
Contractual amounts 239 96 306
Equipment
Contractual amounts 638 608 392
14 FINANCE CHARGES
Interest paid on bank 18 299 48 30
accounts
Interest paid on borrowings 42 125 27 504 23 227
Late payment of tax - - 153
60 424 27 552 23 410
15 BUSINESS COMBINATIONS
Mine Waste Solutions
First Uranium, through its wholly-owned subsidiary FUSA, acquired MWS
and its subsidiary Chemwes on 6 June 2007, with an 1 April 2007
effective date (the MWS acquisition) for the equivalent of ZAR200
million (approximately $27,5 million) to be satisfied by 3 093 980 First
Uranium common shares. MWS owns and operates an existing gold mine
tailings and reprocessing facility adjacent to First Uranium`s
Buffelsfontein tailings recovery project in South Africa. The MWS
acquisition closed on 6 June 2007, at which point First Uranium assumed
management control of MWS. For accounting purposes, any net income from
MWS operations for the period from 1 April 2007 to 6 June 2007 will be
applied to reduce the cost of the MWS acquisition.
16 SEGMENT REPORT
Corpo-
Buffels- First rate
fontein Transvaa Uranium and
Gold l Ezulwin South explora-
Mine Gold i Africa tion Total
R`000 Mine Mine R`000 R`000 R`000
R`000 R`000
Turnover 292 392 18 298 - 60 364 - 371 054
Cost of
production (314 (40 - (47 - (403
686) 809) 533) 028)
(Loss)/Profit
from mining
activities (22 294) (22 511) - 12 831 - (31 974)
Other income (2 183) 1 232 6 385 145 30 021 35 600
General
administration
expenditure,
overheads and
amortisation (27 836) (9 327) (6 477) 4 589 (87 (126
076) 127)
(Loss)/Profit
before finance
charges
interest and
dividends (52 313) (30 606) (92) 17 565 (57 (122
055) 501)
Interest and
dividends
received 2 639 159 (21) 21 72 968 75 766
Finance (9 383) - (9 410) 5 962 (47 (60 427)
charges 596)
Loss before
taxes and
minority
interest (59 057) (30 (9 523) 23 548 (31 (107
447) 683) 162)
Unaudited Unaudited Audited
six months six months twelve months
as at 30 Sep as at 30 Sep as at 31 Mar
2007 2006 2007
R`000 R`000 R`000
17 DIVIDENDS
The Board has resolved not
to declare any dividend to
shareholders for the period
under review.
18 HEADLINE EARNINGS
Reconciliation between loss
and headline loss:
Basic loss for the (107 535) (98 732) (189 722)
period/year
Add back:
Fair value adjustment on
loan
- 5 367 20 946
Minority interest 10 074 2 023 8 092
Profit on disposal of
subsidiary - - 3 967
Headline loss for the
period/year (97 461) (91 342) (156 717)
Loss per share (cents)* (10,26) (11,08) (19,56)
Diluted loss per share
(cents)* (10,58) (10,68) (20,42)
Headline loss per share
(cents)* (9,30) (10,25) (16,16)
Diluted headline loss per
share (cents)* (9,59) (9,88) (17,74)
Net asset value per share
(cents)* 217,80 30,47 151,36
*Based on weighted average
number of shares in issue
Reconciliation of number of `000 `000 `000
shares issued
Reported at 1 April 1 004 987 872 652 872 652
Shares issued to Simmers
Share Trust - 16 085 29 985
Shares issued for cash 53 866 102 350 102 350
Shares issued at 30
September/31 March 1 058 853 991 087 1 004 987
Weighted average number of
shares in issue 1 047 942 891 119 970 051
- Net asset value increased by 740% from R271 million in 2006 to R2,3
billion
- Headline loss for the comparative period decreased from 10,25cps to
9,30 cps
- Raised R350 million for accretive gold projects through a successful
share placement
- Grew revenue 17% from R317 million at September 2006 to R371 million
- Increased overall gold production by 7% from 76 009 ounces for the
corresponding period to 81 254 ounces
- Attained the highest-ever underground tonnage production at
Buffelsfontein since the acquisition of the mine in 2005
- Achieved one million fatality-free shifts at Buffelsfontein Gold Mine
- Added 123 724 ounces of low-cost heap leachable NI 43-101 compliant
resources at TGME through a successful drilling programme
- First Uranium raised gross proceeds of CDN$150 million through the
issue of senior unsecured convertible debentures
- First Uranium acquired Mine Waste Solutions
COMMENTS
The first six months of the 2008 financial year from 1 April 2007 to 30
September 2007 have been a period of intense activity as the Group`s
operations geared up to meet their respective growth and development
targets.
In terms of assuring available funding with which to meet these targets,
the Group raised R350 million in June 2007 through a share placement. Of
this, R170 million has been earmarked for the reopening of the high-grade
Number Five Shaft at Buffelsfontein Gold Mine which added 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. R130 million will be
used to accelerate the Company`s exploration programme at its TGME
operations in Mpumalanga by funding a feasibility study to confirm the
findings of the detailed conceptual study that has outlined the potential
to define 1 million ounces of resources. A pre-feasibility is due by March
2008 and, if positive, will culminate in a bankable feasibility study by
March 2009. The funding also includes the construction of three heap leach
pads in 2008 as part of the bankable feasibility study.
In May 2007, the Group`s 65,47%-held subsidiary, First Uranium Corporation,
successfully raised US$130 million (net) through the private placement of
senior unsecured convertible debentures. This money, together with the net
proceeds of the initial public offering that took place in December 2006
and which amounted to US$177,7 million, are sufficient to develop both the
Ezulwini Mine and the Buffelsfontein Tailings Recovery Project, as
envisaged in First Uranium`s listing prospectus. A portion of the
additional funding has also been earmarked to conduct a drilling programme
and feasibility study in respect of the possible expansion of its Ezulwini
underground uranium and gold mine.
In June 2007, First Uranium acquired Mine Waste Solutions (MWS), a fully
operational gold mine tailings and reprocessing facility adjacent to its
Buffelsfontein Tailings Recovery Project. This effectively allowed First
Uranium to begin gold production in June 2007, 15 months ahead of schedule.
As a result of the acquisition, Simmers` share of First Uranium dropped
from 67,2% to 65,49%. As at 30 September, Simmers` share in FIU was 65,47%
due to the issuing of share options to directors.
BUFFELSFONTEIN GOLD MINE
In the period under review, R77,2 million was assigned to improve
infrastructure and address the pressing issue of face length availability
which has limited production potential at Buffelsfontein Gold Mine
(Buffelsfontein) thus far. Chief among these is phase 1 of the
rehabilitation of the high grade Number Five Shaft.
Other capital projects designed to assist Buffelsfontein to meet its long-
term production and cost forecasts include the commissioning of a new CIP
Plant designed to reduce costs and improve recoveries from 93% to 96%; and
a refrigeration project to allow access to high-grade ore blocks in the
deeper, hotter sections of Seven Shaft.
Buffelsfontein produced 1 988,77 kg (63 941oz) at an average cash cost of
R157 706/kg (US$691/oz) compared to 2 222,49 kg (71 455 oz) for the
equivalent period in F2007, at a cash cost of R121 221/kg. Quarter on
quarter, production has increased 10% from 30 453 ounces to 33 488 ounces
and cash costs decreased from R163 204/kg to R152 708/kg. This positive
trend is expected to continue for the rest of the financial year due to
increased volumes and higher grades.
TRANSVAAL GOLD MINING ESTATES
Subsequent to the closure of the Dukes Hill and Clewer sections of
Transvaal Gold Mining Estates (TGME) in March 2007, the first six months of
F2008 have been dedicated to a complete restructuring of the mine to enable
it to become a very significant element of the future value of Simmers`
gold business. TGME is currently not included in the value assessment of
the Simmers` gold business. The restructuring programme, which has thus far
proved very successful, focuses on two distinct areas:
UNDERGROUND
As reported previously, poor gold recoveries as a result of the refractory
nature of the ore at Frankfort Mine have seriously hindered not only the
excellent production capabilities of that mine but also the reopening of
the underground mines at Beta and Rietfontein. The ore in these latter
areas is equally refractory with preg-robbing capability on a par with
Frankfort Mine. Upgrades to the metallurgical facility have seen recoveries
at Frankfort go from 22,9% (as recorded in July 2007 - the first month
where only Frankfort ore was treated, without the benefit of ore from
Dukes` Hill and Clewer mines to improve the mix) to their current 56%, an
improvement of 145%. Test work to determine the best method of addressing
the problem continues and the results will be presented in a feasibility
report due in December.
SURFACE
The exploration programme to confirm the very significant near-surface low-
grade gold deposits in the region is progressing extremely well despite
delays in permitting. Revenue from the Company`s test heap leach pad at
Elandsdrift was originally anticipated to commence in June 2007 to
alleviate the revenue constraints created by the poor gold recoveries at
Frankfort Mine. The Environmental Management Plan (EMP) has however been
delayed and is expected to be approved in December 2007 and thus cash flow
from surface mining is expected to commence at the end of Q4 F2008. As a
result, TGME`s results for this period do not reflect a gold mine in normal
operation and the increased cash outflow levels should be viewed as the
contribution to the turnaround strategy.
A full analysis of the performance and prospects for Buffelsfontein and
TGME can be found in the Management Discussion and Analysis for Q1 F2008
and Q2 F2008, on www.simmers.co.za.
FIRST URANIUM CORPORATION
In the period under review, the Buffelsfontein Tailings Recovery Project
produced 421,26kg of gold between 6 June 2007 and 30 September 2007 at an
average cash cost of R128 567/kg as a result of the acquisition of MWS.
There was no production for the comparable period. This is significantly
higher than the corporation`s long-term outlook for cash costs at this
operation, as the acquired MWS tailings are nearing the end of their
productive life. Cleaning up the remaining tailings from MWS tailings dam
no. 2 requires mechanical loading and placement near the hydraulic mining
operation, which reduces tonnages and increases handling costs relative to
a normal reclamation operation. More efficient hydraulic reclamation
operations at Buffelsfontein no. 2 dam are expected to commence during
November 2007.
The First Uranium board also approved a US$11,7 million capital programme
to install a reclamation station and pipelines at the Buffelsfontein
Tailings Recovery Project and modifications at the plant are expected to
increase the planned mining rate at MWS from 500 000 tonnes per month to
630 000 tonnes per month. The planned completion of the expansion project
is the end of March 2008. Uranium production is expected to commence in
November 2008 to achieve an average annual production of 922 000 pounds of
uranium along with 128 000 ounces of gold over the 16-year life of the
project.
Ezulwini Mine hoisted its first ore, which, subsequent to 30 September, was
shipped to Randfontein Estates Limited`s Doornkop plant for toll milling.
This arrangement is expected to create early revenue until such time as
Ezulwini has commissioned its own gold plant, which remains on schedule for
April 2008. Ezulwini Mine`s uranium plant is on track for commissioning in
June 2008.
In terms of increasing its resources, underground and surface drilling
targets to expand the Ezulwini Mine have been defined. The current life of
mine of 18 years is based on only 20% of the resource base, providing an
excellent growth opportunity. First Uranium is also in the process of
upgrading a portion of the considerable resource which is in the inferred
category to measured and indicated resources, which will further increase
investor confidence. After
30 September, First Uranium was granted 6 843 hectares of new order
prospecting rights contiguous to the 3 717,5 hectare new order mining right
at the Ezulwini Mine. The exploration right is subject to the approval of
an EMP.
Detailed disclosures of the interim results for First Uranium can be viewed
at www.firsturanium.com.
PROSPECTS
The Company`s focus remains on delivery as the Group continues to track and
monitor deliverables for each operation. The benefits of the planning and
expenditure thus far are expected to flow through to the end of F2008, and
establish a secure basis for sustainable growth into the future. This
emphasis on delivery prompted the Group to begin quarterly reporting as of
Q1 F2008. To ensure that deliverables are achieved, an employee performance
programme is being introduced.
By order of the Board
A Townsend
Secretary
26 November 2007
Transfer secretaries
South Africa Computershare Investor Services 2004 (Pty) Limited Ground
Floor 70 Marshall Street Johannesburg 2001 Republic of South Africa United
Kingdom Capita IRG plc The Registry 34 Beckhenham Road Beckenham Kent BR3
4TU United Kingdom
Registered office
5 Press Avenue, Selby, Johannesburg 2025, Republic of South Africa
Sponsor
Sasfin Capital, A division of Sasfin Bank Limited
Sasfin Place North Block 13 - 15 Scott Street Waverley Johannesburg 2090
Republic of South Africa
Directors NRG Brunette (Independent Non-executive Chairman) BJ Njenje (Non-
executive Vice-chairperson) GT Miller (Chief Executive Officer) DH Brown
(Independent Non-executive Director) J de V Berry (Executive Director) SLB
Mapisa (Non-executive Director) EA Meyer (Independent Non-executive
Director) AX Sisulu (Non-executive Director) KPE Wakeford (Independent Non-
executive Director)
Date: 26/11/2007 07:05:05 Produced by the JSE SENS Department.
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