| Mon 27 Oct 2008, 8:30 | | SIM - Simmer and Jack Mines Limited - Updated Technical Reports published on |
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SIM
SIIF
SIM - Simmer and Jack Mines Limited - Updated Technical Reports published on
Company website - www.simmers.co.za
SIMMER AND JACK MINES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1924/007778/06)
Share code: SIM
ISIN: ZAE000006722
("Simmers" or "the company"
Simmers` gold division optimizes capital requirements for growth projects
Updated Technical Reports published on Company website - www.simmers.co.za
Simmer & Jack Mines, Limited ("Simmers" or "the Company") has issued revised
independent technical reports for its Buffelsfontein Gold Mine ("BGM") in the
North West Province and at Transvaal Gold Mining Estates ("TGME"), its
Mpumalanga-based subsidiary. The revised reports, dated 15 October 2008, were
initiated to optimize the Company`s capital requirements given the deterioration
in the current capital market environment and are a follow-up to the initial
findings published by the Company on 16 April 2008.
The April 2008 news release detailed the Company`s growth and development
strategy for its two wholly-owned gold operations. These included the Mega Float
Project at BGM and the implementation of BIOX and Heap Leach technology at TGME.
The updated reports reflect a slower and more selective build-up of these
projects to be largely funded from cash flow from operations and outline a
capital requirement of US$99.8 million to bring them online over the next 5
years. Simmers is pursuing a number of external funding alternatives, which if
successful, will result in the current capital programme and production growth
profiles contained in the updated technical reports being accelerated.
"In April we announced an aggressive development plan aimed at substantially
growing our production base through the implementation of low-cost, low-risk
surface and near-surface development projects. Despite inflationary pressures on
mining consumables and an increase in the cost of Eskom power, the rationale for
implementing the Mega Float, BIOX, and Heap Leach projects, at current gold
prices and currency levels, remains compelling. The reality however is that
capital market conditions to fund new growth projects have deteriorated
significantly since April and the revised reports have been tailored to reduce
external funding requirements and allow for a more gradual build up of
production from our new growth projects," said Gordon Miller, chief executive of
Simmers.
The updated technical reports reflect the Company`s response to current
challenges being faced by the mining industry and take into account the
unprecedented increase in the costs of reagents, fuel, steel and other mining
consumables, as well as the impact of safety-related issues and permitting
delays on current production levels.
While the Company intends to continue monitoring capital markets for alternative
financing arrangements, management remains focused on profitably operating its
existing projects, which are expected to generate positive free cash flow in the
fourth quarter at prevailing Rand denominated gold prices in excess of R255
000/kg.
Based on the results of the updated technical reports, the Life of Mine Net
Present Value of Simmers` gold assets is reported as R3,350 billion, compared to
R3,003 billion reported in April, an increase of 11.6%. The updated NPV is based
on a long-term exchange rate of R8.00 to the US Dollar and long term gold price
of US$757 per ounce of gold and a real discount rate of 8%. A summary of the
key changes between the initial findings released in April and the October 15
reports is reflected in the tables below:
Table One News Tech Var %
Release Report
16 April 15 Oct
`08 08
Buffelsfontein Gold Mine
NPV (Real terms based on Reserves) (R` 2.24 2.66 18.75%
billion)
LOM NPV (Real terms) (R`billion) 2.67 2.97 11.24%
Inferred resource (Moz) 7.4 7.1 -4.2%
Measured and Indicated resources (Moz) 11.025 11.025 0.0%
Proven and Probable reserves (Moz) as at 5.74 5.74 0.0%
November 2007
Life of Mine ounces (Moz) 6.207 6.066 -2.3%
2010 production rate (koz) (excluding 191 144 -24.6%
surface ounces)
Capex cost per ounce - LOM plan (incl 29 47 62.%
Resources) US$
Cash operating cost per ounce - LOM plan 464 457 -1.5%
(incl Resources) US$
Cash operating cost per tonne (LOM plan 52.7 53.3 1.1%
incl Resources) US$
Average US$ gold price 742 783 5.5%
Average ZAR/US$ exchange rate 7.53 8.00 6.2%
Table Two News Tech Var %
Release Report
16 April 15 Oct
`08 `08
TGME - surface and underground
LOM NPV (Real term - based on resources) 0.340 0.382 12.4%
(R` billion)
Internal rate of return (%) 36.6 80.7 120.5%
Inferred resource (Moz) 1.874 1.979 5.6%
Measured and Indicated resources (Moz) 0.722 0.776 7.5%
Proven and Probable reserves (Moz) 0.075 0 -100%
Life of mine ounces delivered to mill 0.777 0.790 1.7%
(Moz)
2010 recovered production rate (koz) 44.522 33.930 -23.8%
Capex cost per ounce LOM plan US$ 85 107 25.9%
Cash operating cost per ounce LOM plan 455 426 -6.4%
US$
Cash operating cost per tonne LOM plan 56.5 58.9 4.2%
US$
Average US$ gold price - long term 759 796 4.9%
Average ZAR/US$ exchange rate - long 7.51 8.00 6.5%
term
Update to TGME Resource and Reserve Statement published in April 2008
BGM`s mineral resource statement as published in the Company`s 2008 Annual
Report remains unchanged.
At TGME, the surface projects were initially treated as a pre-feasibility study
while the underground project was treated as a preliminary assessment. The
October report is a consolidated preliminary assessment combining both the
surface and underground projects into one report. As a result, TGME`s surface
mineral reserves indicated in the news release in April 2008 have been excluded
in the new consolidated report as required by the provisions of Canadian
National Instrument 43-101 ("NI 43-101").
Table three below shows the TGME mineral resource statement that was issued in
April 2008. Table four shows the revised mineral resource statement reflecting
the subsequent changes to the technical reports:
Table three: TGME Resource and Reserve Tabulation as published in April 2008
Underground Surface
Gold Gold
Moz Mt g/t Moz Mt g/t
Measured & 0.600 3.063 6.09 0.122 5.061 0.75
Indicated
Resources
Inferred 1.833 14.274 3.99 0.041 1.393 0.91
Resources
Proven & 0 0 0 0.074 2.463 0.94
Probable
Reserves
Notes:
1.All figures are SAMREC and NI 43-101 compliant
2.Columns may not add up due to rounding
3.Resources are inclusive of reserves
4.Kg to oz conversion factor: 32.15076
5.Resources / Reserves are estimated using an average gold price of R152 097/kg
6.Reserves are stated as `fully diluted delivered to mill` figures
7.Specific notes:
TGME UG Resources
1.Effective Date: 29 February 2008
2.The tonnages and grades are quoted as stope tons
3.SG used for the reefs are as follows:
-Dukes Hill/Clewer and Frankfort Bevett`s =3.3 t/m3,
-Rietfontein = 2.9 t/m3,
-All other = 3.8 t/m3
TGME UG Reserves
1.Effective date: 29 February 1008
TGME Surface Resources
1. Effective Date: 15 April 2008
2. SG = 2.3t/m3
TGME Surface Reserves
1. Effective Date: 15 April 2008
Table Four: Revised Resource and Reserve tabulation for TGME as at October 2008
Underground Surface
Gold Gold
Moz Mt g/t Moz Mt g/t
Measured & 0. 653 3.310 6.14 0.122 5.061 0.75
Indicated
Resources
Inferred 1.94 14.65 4.11 0.041 1.39 0.91
Resources
Proven & 0 0 0 0 0 0
Probable
Reserves
Notes:
1.The Frankfort resources have been updated as a result of remodeling including
the latest surface drillhole results
2.The Inferred Resource at Rietfontein has been remodeled resulting in an
increase to the resource.
3.All figures are SAMREC and NI 43-101 compliant
4.Columns may not add up due to rounding
5.Kg to oz conversion factor: 32.15076
6.Resources / Reserves are estimated using an average gold price of R152 097/kg
7.Specific notes: TGME Underground Resources
1. Effective Date: 15 October 2008
2.The tonnages and grades are quoted as stope tons
3.SG used for the reefs are as follows:
Dukes Hill/Clewer and Frankfort Bevett`s =3.3 t/m3,
Rietfontein = 2.9 t/m3,
All other = 3.8 t/m3
TGME Surface Resources
1.Effective Date: 15 April 2008
2.SG = 2.3t/m3
The independent technical review of the Simmers Gold Operations was conducted by
Minxcon (Pty) Limited. This was done in conjunction with TWP Consulting, who
evaluated each of the capital projects. Both companies and the respective
qualified persons who compiled the reports are independent of Simmer & Jack
Mines, Limited.
All technical disclosure in this news release have been prepared in accordance
with SAMREC and NI 43-101 by Daan van Heerden, B.Sc., M.Comm., Charles Muller,
B.Sc, Pr.Sci.Nat, and Johan Odendaal, B.Sc., M.Sc., Pr.Sci.Nat all of Minxcon
(Pty Ltd), each of whom is a "qualified person" under NI 43-101. Messers van
Heerden, Muller and Odendaal have reviewed and approved the technical
disclosures in this news release.
The reports, entitled "Technical Report on the Mineral Resources and Mineral
Reserves of Buffelsfontein Gold Mines Limited, Northwest Province South Africa"
and "Technical Report on the Preliminary Assessment of the underground and
surface mineral assets of Transvaal Gold Mining Estates Limited and Sabie Mines
(Pty) Limited, Mpumalanga Province, South Africa" can be viewed on the Company`s
website, www.simmers.co.za .
Cautionary Language Regarding Forward-Looking Information
This news release contains certain forward-looking statements. Forward-looking
statements include but are not limited to those with respect to the price of
uranium and gold, the estimation of mineral resources and reserves, the
realization of mineral reserve estimates, the timing and amount of estimated
future production, costs of production, capital expenditures, costs and timing
of development of new deposits, success of exploration activities, permitting
time lines, currency fluctuations, requirements for additional capital,
government regulation of mining operations, environmental risks, unanticipated
reclamation expenses, title disputes or claims and limitations on insurance
coverage and the timing and possible outcome of pending litigation. In certain
cases, forward-looking statements can be identified by the use of words such as
"plans", "expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or
"believes" or variations of such words and phrases, or state that certain
actions, events or results "may", "could", "would", "might" or "will" be taken,
occur or be achieved. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of Simmer & Jack Mines, Limited to be materially
different from any future results, performance or achievement expressed or
implied by the forward-looking statements. Such risks and uncertainties
include, among others, the actual results of current exploration activities,
conclusions of economic evaluations, changes in project parameters as plans
continue to be refined, possible variations in grade and ore densities or
recovery rates, failure of plant, equipment or processes to operate as
anticipated, accidents, labour disputes or other risks of the mining industry,
delays in obtaining government approvals or financing or in completion of
development or construction activities, risks relating to the integration of
acquisitions, to international operations, to prices of uranium and gold.
Although Simmer & Jack has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or intended. It
is important to note, that: (i) unless otherwise indicated, forward-looking
statements indicate the Company`s expectations as at October 2008; (ii) actual
results may differ materially from the Company`s expectations if known and
unknown risks or uncertainties affect its business, or if estimates or
assumptions prove inaccurate; (iii) the Company cannot guarantee that any
forward-looking statement will materialize and, accordingly, readers are
cautioned not to place undue reliance on these forward-looking statements; and
(iv) the Company disclaims any intention and assumes no obligation to update or
revise any forward-looking statement even if new information becomes available,
as a result of future events or for any other reason.
In making the forward-looking statements in this news release, Simmer & Jack has
made several material assumptions, including but not limited to, the assumption
that: (i) approvals to transfer or grant, as the case may be, mining rights will
be obtained; (ii) metal prices, exchange rates and discount rates applied in the
economic assessments are achieved; (iii) mineral resource estimates are
accurate; (iv) the technology used to develop and operate its two projects has,
for the most part, been proven and will work effectively; (v) labour and
materials will be sufficiently plentiful as to not impede the projects or add
significantly to the estimated cash costs of operations; (vi) outstanding
approvals for the completion of an acquisition, the transfer of mining rights
and the approval of mining rights will be granted; and (vii) black economic
empowerment ("BEE") investors will maintain their interest in the Company and
their investment in the Company`s common shares to a sufficient level to
continue to support the Company`s compliance with 2014 BEE requirements.
Contacts:
Simmer and Jack Mines Limited
5 Press Avenue, Selby, South Africa, 2025
www.simmers.co.za
For further information, please contact:
Gail Strauss, Group Communications at +27 11 830 0390 or 084 777 4060
gail@simmers.co.za
27 October 2008
Sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Date: 27/10/2008 08:30:01 Produced by the JSE SENS Department.
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