| Tue 2 Jun 2009, 11:49 | | SIM - Simmers Production And Project Update For The Fourth Quarter And Year |
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SIM
SIIF
SIM - Simmers Production And Project Update For The Fourth Quarter And Year
Ending 31 March 2009
Issued by Simmer & Jack Mines, Limited
(Incorporated in the Republic of South Africa)
(Registration number 1924/007778/06)
Share code: SIM
ISIN Code: ZAE000006722
("Simmers")
PRODUCTION AND PROJECT UPDATE FOR THE FOURTH QUARTER AND YEAR ENDING 31 MARCH
2009
Simmer & Jack Mines, Limited today announced its production results and a
project update for the fourth quarter ("Q4 2009") and the fiscal year ended
31 March 2009 ("FY 2009").
During Q4 2009, the Group achieved the following:
- Produced 48 298 ounces of gold;
- Acquired the Tau Lekoa mine, transforming Simmers from a junior miner to a
mid-tier gold producer;
- Concluded a number of successful fund raising initiatives in order to meet
all funding requirements at current metal prices;
- Added an additional 28 000 tonnes of gold-bearing ore to the heap leach pad
at Elandsdrift, which is expected to further improve the yield by an
additional 16 kilograms of gold in Q2 F2010;
- Commenced multi-shift development of Frankfort`s high grade B-Block;
- Completed Phase Two of the rehabilitation of Buffelsfontein Gold Mine`s
(BGM`s) high grade Number Five shaft and began commissioning the Number Seven
shaft refrigeration plant;
- Generated positive cash flow, after CAPEX, at BGM;
- Achieved one million fatality-free shifts at Ezulwini Mine;
- Commenced commissioning the uranium plant at Ezulwini Mine;
- Completed key elements of the rehabilitation of the Ezulwini mine shaft;
- Concluded two-year CPI-related wage agreement with organized labour at BGM.
During FY2009, the Group:
- Improved safety levels at all operations;
- Produced 183 036 ounces of gold, a 9% increase on FY2008;
- Advanced refurbishment, construction and development activities at both
Ezulwini Mine and Mine Waste Solutions (MWS);
- Commenced on-site gold production at Ezulwini Mine;
- Completed Phase One and Two of the three-phase rehabilitation of BGM`s high-
grade Number Five shaft;
- Built and commissioned a test-heap leach pad at Elandsdrift and proved the
viability of this high-margin mining method in the TGME goldfield;
- Began the permitting process around three new heap leach targets at TGME;
- Improved underground recoveries at TGME from 37% to overall recoveries of
65%, without the use of BIOX technology;
- Completed commissioning of the MWS Phase 1A gold plant expansion and
established MWS as one of the lowest-cost gold producers in South Africa in
its first full-year of production;
- Concluded two-year wage agreements at all of its operations;
- Secured sufficient independent power supply to ensure that future Eskom
power-shortages do not impact on production at First Uranium`s two projects.
Gordon Miller, CEO of Simmers and First Uranium commented, "This has been a
critical year for Simmers in that we have made good progress in advancing
each of our development projects. First Uranium is now in uranium production
at Ezulwini Mine, which also completed its first full year of gold
production.
"The highlights of the quarter were undoubtedly the acquisition of Tau Lekoa
from AngloGold Ashanti, which will transform Simmers into the fourth largest
gold producer in South Africa, and the commissioning of the uranium plant at
Ezulwini Mine.
"In terms of the year, one of the major highlights for Simmers has to be the
overwhelming success of Elandsdrift which has proved that the roll-out of low-
cost, low-risk heap leach technology is key to the future of TGME."
For Q4 2009 the Group produced 48 298 ounces (1 502 kilograms) of gold. This
is compared to 51 879 ounces (1 614 kilograms) in Q3 2009. The 7% reduction
was primarily due to First Uranium`s decision to focus on the completion of
shaft rehabilitation work at Ezulwini. This is an important milestone as it
allows the shaft to be available for full utilization of underground mining
and development activities going forward.
Of the 48 298 ounces (1 502 kilograms) produced in the quarter, 41 194 ounces
(1 281 kilograms) is attributable to Simmers. This is compared to 44 733
ounces (1 391 kilograms) in Q3 F2009. The 8% reduction in attributable
production is as a result of Simmers` shareholding in First Uranium reducing
from 62.3% to 41.0% during the quarter.
For FY 2009 the group produced 183 036 ounces (5 693 kilograms) of gold, a 9%
increase on the 167 912 ounces (5 223 kilograms) produced during FY 2008.
The 129 376 ounces (4 022 kilograms) produced by Simmers` wholly-owned gold
operations was 4% below the plan of 135 000 ounces (4 199 kilograms) for the
year.
The production results for the Group and the individual operating entities
for the year ended 31 March 2009 are set out in the table below. For ease of
reading, it can also be found on the Company website, www.simmers.co.za, on
the home page under the heading "Latest Results"
Quarterly and Annual Production Results (Year End: March)
UNIT Q1 Q2 Q3 Q4 F2009 F2008
F2009 F2009 F2009 F2009 YTD YTD
SIMMERS
Buffelsfontein
Gold Mine
(BGM)
Tonnes of ore T 534 519 530 767 517 167 2 101 1 851
milled 288 533 755 525
Gold produced Kg 873 955 930 925 3 683 3 815
Gold produced Oz 28 076 30 688 29 898 29 743 118 406 122 655
TGME U/G plus
Heap Leach
Tonnes of ore T 11 657 13 715 14 981 14 820 55 173 72 000
milled
Gold produced Kg 56 72 93 120 339 290
Gold produced Oz 1 803 2 304 3 001 3 862 10 970 9 316
TOTAL: SIMMERS
(SIM)
Tonnes of ore T 545 533 545 748 531 987 2 156 1 923
milled 945 248 928 525
Gold produced Kg 929 1 026 1 023 1 045 4 022 4 105
Gold produced Oz 29 880 32 992 32 900 33 605 129 376 131 971
FIRST URANIUM
Ezulwini
(100%)
Tonnes of ore T - 43 812 80 078 108 575 232 465 -
milled
Gold sold Kg - 4 199 133 336 241
Gold sold Oz - 129 6 398 4 276 10 803 7 748
MWS (100%)
Tonnes of ore Kt 1 665 1 839 1 798 1 693 6 995 4 053
reclaimed
(000s)
Gold sold Kg 241 377 391 324 1 333 877
Gold sold = oz 7 741 12 118 12 581 10 417 42 857 28 192
TOTAL: FIRST
URANIUM (FIU)
Tonnes of ore kt 1 665 1 883 1 878 1 801 7 227 4 053
milled (000s)
Gold sold kg 241 381 590 457 1 669 1 118
Gold sold oz 7 741 12 247 18 979 14 693 53 660 35 940
TOTAL SIMMERS
GROUP
(FIU 100% +
SIM)
Gold produced kg 1 170 1 407 1 614 1 502 5 693 5 223
and/or sold
Gold produced oz 37 621 45 239 51 879 48 298 183 036 167 912
and/or sold
TOTAL: SIMMERS
(Attributable)
Attributable: 62.3% 62.3% 62.3% 41.0% 62.3%
SIM share in
FIU
Gold produced kg 1 079 1 264 1 391 1 281 5 106 4 802
and/or sold
Gold produced oz 34 706 40 628 44 733 41 194 161 262 154 380
and/or sold
Notes:
At Ezulwini, in FY 2008 all the ore was toll-treated at a gold plant at a
neighbouring mine.
BGM
Production at BGM was largely steady quarter on quarter despite losing three
shifts in January as a result of the extended Christmas break. The total of
29 743 ounces (925kg) produced was consistent with previous guidance of
between 29 500 and 31 000 ounces (918kg and 964kg).
Quarter on quarter, BGM also recorded a marked increase in positive cash flow
after CAPEX, largely due to the improved gold price and the drive to reduce
costs. Apart from being cash flow positive after CAPEX for the second quarter
in a row, BGM also marked the completion of Phase Two of the three part
programme to rehabilitate the high grade Number Five shaft. Phase Two
comprised the completion of the winder house and the barrel of Number 5A
shaft, providing critical access to the 5A haulage pillar. The build-up in
square metres over the next few quarters will come primarily from the 5A
haulage pillar. Phase Three, which comprises the refrigeration plant in the
5A shaft area and the rock handling in Number Five shaft is on schedule for
completion in September 2009.
The commissioning of the Mini-Float project, originally scheduled for March
2009, was deferred to September 2009 following the decision in October 2008
to fund growth projects at BGM from cash flow from operations. The Mini-
Float project utilizes flotation technology to optimise the waste rock fed to
the mill in order to enhance plant treatment capacity.
Year on year, BGM`s production output fell by 3%, reflecting the challenge
faced by BGM to create sufficient face length at, or above, the mine`s
average reserve grade. The completion of the rehabilitation of the high-grade
Number Five shaft is expected to redress this issue going forward. Safety
issues also affected BGM`s potential to deliver the 122 000 ounces as per the
FY2009 mine plan. A fatal accident in August 2008 resulted in the closure of
the high grade number 2 shaft for two weeks. Thereafter, production at the
shaft was limited to 30% of planned output for the remainder of the third
quarter to accommodate the implementation of additional support elements in
pillar areas. Number Two shaft only resumed operating at full capacity in
January 2009. These additional safety measures have resulted in a reduction
of BGM`s fatality rate from 0.17 in FY2008 to 0.07 in FY2009, compared to the
South African Gold Mining Industry average of 0.25.
No fatalities were reported at any of the Group`s other three operations for
the fiscal year.
BGM expects to produce between 30 200 and 31 200 ounces (940 - 970kg) in Q1
F2010 despite the short month of April 2009 which had only 18 operating days.
TGME
At Transvaal Gold Mining Estates gold production was up 29% quarter on
quarter. Although an improvement, the 3 862 ounces produced were below
guidance of between 4 400 and 5 000 ounces for the quarter. This in turn
affected the annual target which was 2 030 ounces short of the 13 000 target
ounces in the FY2009 production profile. This is primarily due to the six
month hiatus between the awarding of the Mining Right at Elandsdrift in March
2008 and the issuing of the Water Use Licence in October 2008. Had the
commencement of heap leach activities at Elandsdrift not been delayed by the
Water Use Licence, between 1 930 and 2 250 high-margin ounces (60 and 70kg)
of gold would have been added to TGME`s production profile.
Underground production at Frankfort was constrained by a geological thrust
fault which eliminated the reef in the Frankfort A block, resulting in a loss
of planned available face length in the last two quarters of FY2009. This
necessitated moving the production crews to the Frankfort B Block and the
fast-tracking of the planned re-development of the Theta Mine, which was
achieved in less than two months.
As a result of these interventions, TGME expects to increase production in
the first quarter of F2010 to produce between 4 400 and 4 700 ounces.
TAU LEKOA
Tau Lekoa was acquired in February 2009 for a consideration of R600 million,
of which R150 million can be offset by unhedged free cash flow generated by
Tau Lekoa in the 2009 calendar year during which it is expected to produce
approximately 150 000 ounces at a cash cost of between US$455 and US$475/oz,
or R143 000 to R149 000/kg.
Simmers has provided the financial guarantee required by AngloGold Ashanti
and an integration committee to facilitate the integration of Tau Lekoa into
BGM has been established.
FIRST URANIUM
As previously reported First Uranium announced that the commissioning of the
uranium plant at the Ezulwini Mine has commenced.
For more details on First Uranium`s production numbers please refer to the
First Uranium production update issued on the JSE`s Stock Exchange News
Service (SENS), dated 22 May 2009.
Simmers expects to announce annual audited financial results for its fiscal
year ended 31 March 2009, on 18 June 2009.
Cautionary Language Regarding Forward-Looking Information
Information Statements contained in this news release that are not historical
facts are forward looking statements that involve risks, uncertainties and
other factors that could cause actual results, performance, prospects and
opportunities to differ materially from those expressed or implied by such
forward looking statements. Although Simmer & Jack believes that the
assumptions inherent in the forward looking statements are reasonable, undue
reliance should not be placed on these statements, which only apply as of the
date of this release. Simmer &Jack disclaims any intention or obligation to
update or revise any forward looking statement, whether as a result of new
information, future events or otherwise .
About Simmers
Simmer & Jack is a gold and uranium miner focused on the development and
expansion of surface and underground operations in South Africa. These
include a 37.24% stake in TSX and JSE-listed First Uranium Corporation which
is aiming to become a significant low-cost producer through the re-opening
and underground development of the Ezulwini Mine and the expansion of the
Mine Waste Solutions tailings recovery operation. Simmers` has two wholly-
owned gold operations: Buffelsfontein Gold Mine (BGM) in the North West
Province and Transvaal Gold Mining Estates Limited (TGME) in the Pilgrim`s
Rest/Sabie gold field. Simmers entered into an agreement with AngloGold
Ashanti on 17 February 2009 to purchase 100% of the Tau Lekoa mine, situated
12 km`s from Buffelsfontein Gold Mine. The deal is subject to certain
conditions precedent and is expected to close on 01 January 2010.
For further information please contact:
Simmer & Jack:
Nick Goodwin at +27 83 629 8605; nick@simmers.co.za
Gail Strauss at +2782 936 8481; gail@simmers.co.za
www.simmers.co.za
First Uranium: Bob Tait at + 1 416 558 3858; bob@firsturanium.ca
www.firsturanium.com
2 June 2009
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 02/06/2009 11:49:02 Produced by the JSE SENS Department.
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