| Wed 19 Aug 2009, 7:05 | | SIM - Simmers - Simmers Reports Results For First Quarter Ended 30 June 2009 |
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SIM
SIIF
SIM - Simmers - Simmers Reports Results For First Quarter Ended 30 June 2009
Simmer & Jack Mines, Limited
(Incorporated in the Republic of South Africa)
(Registration number 1924/007778/06)
Share code: SIM
ISIN Code: ZAE000006722
("Simmers" or the "company" or the "group")
SIMMERS REPORTS RESULTS FOR FIRST QUARTER ENDED 30 JUNE 2009
For a full discussion of the quarter`s results, please refer to the
Management Discussion and Analysis (MD&A) on the company`s website, hosted at
www.simmers.co.za, under `Latest Results`.
OVERVIEW
Simmers today announced its financial results for the quarter ended 30 June
2009 (Q1 FY2009) as detailed in the latest Management Discussion and Analysis
(MD&A), which can be found on the company`s website.
In February 2009, Simmers acquired the Tau Lekoa mine from AngloGold Ashanti.
The deal is subject to a number of conditions precedent and Simmers expects
to take ownership in January 2010. The reduction of Simmers` holding in First
Uranium Corporation Limited (First Uranium) to below 50% in March 2009
changed the relationship between Simmers and First Uranium from that of
subsidiary to an associate company. Consequently First Uranium was equity
accounted for as an investment in an associate from March 2009 onwards
rendering comparisons between Q4 FY2009 and Q1 FY2010 meaningless, especially
when comparing items in the Statement of Comprehensive Income. For
information on First Uranium`s year end results, please refer to the MD&A and
annual financial statements for the quarter ending 30 June 2009 on their
website hosted at www.firsturanium.com
Highlights:
- Fatality-free quarter
- Group (at 100%) produced 46 589 ounces (1 449 kg) of gold compared to
the 48 298 ounces (1 502kg) in Q4 FY2009
- Group unit cash costs increased from R246 817/kg in Q4 FY2009 to R279
090/kg
- Group revenue decreased from R372 million to R252 million as a result of
the negative impact of the strong rand on the gold price, marginally
reduced volumes and a change in the accounting treatment from March 2009
onwards which excluded any revenue from First Uranium in Q1
- Revenue from Simmers` wholly-owned gold operations decreased 17% from
R304 million to R252 million as a result of a 16% reduction in the gold
price received and a 2% decrease in gold production
- Gross proceeds of R289 million raised for the fast-tracking of the
Weltevreden project
- First batch of ammonium diuranate ("yellowcake") produced at Ezulwini
Mine
- Final commissioning of the first of two streams of the Ezulwini Mine`s
100 000 tonne per month uranium plant completed
- Mine Waste Solutions (MWS) secures guaranteed supply of sulphuric acid
to MWS for a 36-month period
- Bought deal financing raises gross proceeds of Cdn$106.8 million for
acceleration of pressure leach at MWS
- First Uranium enters into a letter of intent to supply Eskom with
uranium for its Koeberg nuclear power station
During Q2 FY2010 the group aims to:
- Continue with the rationalisation process aimed at buffering Simmers`
gold operations from the stronger rand
- Revise life of mine plans for the Simmers wholly-owned gold operations
- Complete the third and final phase of the rehabilitation of BGM`s high
grade Number Five shaft
- Continue with integration plans for Tau Lekoa
- See the benefits of the newly commissioned Mini Float at BGM aimed at
boosting low-cost surface production
- Expand the Elandsdrift heap leach pad at TGME
- Begin surface production from TGME`s Vaalhoek rock dump
- Provide a credit facility of R160 million to First Uranium
- Execute the new order mining right granted by the Department of Mineral
Resources to MWS;
- Proceed with the establishment of MWS` new tailings deposition site
following formal approval of the site by the
- North West Province Department of Agriculture, Conservation and
Environment in July 2009
STATEMENT BY THE CHIEF EXECUTIVE OFFICER
"In common with many South African miners, the unexpected strength of the
local currency has impacted negatively on earnings in the first quarter of
the 2010 financial year.
At Buffelsfontein Gold Mine (BGM), the strong rand impacted on the marginal
mine`s road to recovery. Having posted two good quarters, the loss from
mining activities in the current quarter means that the rationalisation
process that began in November last year was intensified and has resulted in
the closure of Number 12 shaft. This will cut almost 90% of the overhead
costs associated with running this shaft, while the high grade material
previously mined from 12 shaft will now be hoisted through Number 10 shaft.
BGM will continue to rationalise unprofitable shafts and sections until such
time as the mine returns to profitability at the current rand gold price.
It should be noted however that BGM`s risk profile is about to improve
substantially due to three new sources of production which are expected to
come on line before the end of the current financial year, namely, the
introduction of the Mini Float project which was commissioned in July 2009 to
treat low-cost surface waste rock; the completion of the rehabilitation
programme of the high grade Five Shaft which is on track for September 2009;
and the addition of higher-grade tonnage from Tau Lekoa from January 2010
onwards. BGM also lost approximately 791 ounces (24.6 kg) in the quarter due
to unscheduled safety stoppages as a result of the North West regional office
of the Department of Mineral Resources issuing three Section 54 Notices
following routine inspections. These were all uplifted in a relatively short
space of time, following presentations by the general manager to the regional
head of the Department. At current gold prices, had these kilograms been
produced, BGM`s operating loss (before non-cash production related
expenditure) of R2.9 million would have reverted to an operating profit of R3
million.
In order to mitigate the impact of the strong rand, the focus for the
remaining two quarters remains squarely on cash preservation through the
controlling and cutting of costs until such time as higher tonnages at better
grades lead to improved cash generation.
For the underground trial-mining project at Transvaal Gold Mining Estates
(TGME), the strong rand compounded a loss-making situation created by ongoing
permitting delays. In July we took steps to curb the cash burn at TGME by
temporarily suspending underground operations until such time as all four of
the mine`s heap leach pads are up and running. Originally, these four low-
cost surface projects were intended to subsidize the development of the
underground operations until such time as BIOX technology could be tested on
all underground targets, and we`d improved the confidence levels of our
underground reserves. The roll-out of these surface projects has taken much
longer than anticipated, primarily due to the complexity of the permitting
process. This is tremendously frustrating and very sad as it means the loss,
albeit temporarily, of 270 jobs in an area plagued by high rates of
unemployment. In the interim we will continue development of Frankfort Mine`s
high grade B Block to allow the viability of the underground operations to be
re-evaluated at a higher rand gold price.
First Uranium, which released its first quarter results on Friday 14 August
2009, is on course with its key goals for FY2010, and continues to advance
the construction of its third gold plant and first two uranium plants at its
MWS tailings recovery operation and accelerate the underground development at
its Ezulwini Mine to feed the recently completed gold and uranium plants. As
a result of spending on investments to increase uranium and gold production,
First Uranium posted a net loss for the quarter of US$33.3 million or US$0.22
per share. The substantial increase in the consolidated loss was primarily
due to the gross loss incurred at the Ezulwini Mine, which is continuing to
ramp up its underground development to fill its underutilized uranium and
gold plants, combined with the significant foreign exchange loss on
translation during the quarter.
Significant to the future success of First Uranium, was the progress made
regarding necessary permits and approvals related to its MWS operation. In
July 2009, First Uranium received formal approval from the North West
Province Department of Agriculture, Conservation and Environment for the new
tailings deposition site, thus enabling MWS to proceed on schedule with
construction of this tailings facility for completion in Q1 FY 2011. In
addition, the Department of Mineral Resources granted MWS a `new order`
mining right, which signals their approval of the operation`s Environmental
Management Plan and its Social and Labour Plan, thus establishing a firm
foundation for the future of this operation.
In turn, the Ezulwini Mine has recently completed its currently-identified
capital projects and is accelerating underground development to drive
increases in the production of uranium and gold and we expect this operation
to turn cash positive in Q3 FY2010,First Uranium believes that its cash
resources of US$123 million at 30 June 2009 and the cash forecasted to be
generated from the sale of gold and uranium from both its operations,
together with a one-year term credit facility of R160 million provided by
Simmers, will provide sufficient funding to complete the current capital
projects at the two operations which are expected to cost US$266 million.
Should management in future determine that the funding is not sufficient,
First Uranium will at that time look to a potential new South African project
financing facility, if it is available, or reprioritize development and
expansion activities to reduce potential funding requirements.
In terms of the First Uranium production update also issued on Friday 14
August 2009, commissioning of a second gold plant module at MWS has begun
and, once fully commissioned, is expected to more than double MWS`s low-cost
gold production from 43 100 ounces to approximately 100 000 ounces per annum.
With the commissioning of its first uranium plant in the first quarter, First
Uranium is well positioned to fulfil its vision to be a long-term low-cost
producer of both gold and uranium."
SUMMARISED FINANCIAL OVERVIEW - Q1 FY2010
For Q1 FY2010 the group produced 46 589 ounces (1 449 kg) compared to 48 298
ounces (1 502 kg) in Q4 FY2009.
The reduced volumes also impacted on total unit cash costs which rose 13% for
the group (at 100%) from 246 817/kg to 279 090/kg. Of the 46 589 ounces (1
449 kg) produced in the quarter, 32 994 ounces (1 026 kg) is attributable to
Simmers Gold Division. This is compared to 33 605 ounces (1 045 kg) in Q4
FY2009.
Revenue for Simmers Gold reduced from R304 million to R252 million for the
quarter. This is primarily due to the stronger rand which resulted in a 16%
drop in the rand gold price, quarter on quarter. Volumes were also down 2%
due to a drop in surface production at BGM and lower-than anticipated
production levels from TGME.
The quarter on quarter variances are not comparable because of First
Uranium`s subsidiaries being accounted for as associate companies for the
full quarter in Q1FY2010. For example, no revenue from First Uranium was
included in the group figures in Q1FY2010, whereas Q4FY2009 reflects two
months` revenues from First Uranium. Similarly, this change in accounting
treatment affects all line items in the Statement of Comprehensive Income.
The Q4 FY2009 results also reflect the accounting treatment following the
once-off gain from the partial sale of First Uranium shares which amounted to
R3.2 billion, rendering a quarterly comparison meaningless.
As at 30 June 2009, Simmers reported total assets of R4.3 billion, total
liabilities of R590 million, shareholders` equity of R3.75 billion, cash and
cash equivalents of R1.02 billion compared to R842.7 million at year end.
Q1 Q4 VARIANCE
FY2010 FY2009 Q1 v Q4
SELECTED FINANCIAL INFORMATION R`000 R`000 %
STATEMENT OF COMPREHENSIVE INCOME
Revenue 251,754 371,954 (32%)
Total cash cost (263,830) (314,436) 16%
Production-related depreciation (10,196) (13,727) 26%
OPERATING (LOSS) FROM MINING
ACTIVITIES (22,272) 43,791 (151%)
Non-production related depreciation
(1,335) (3,319) 60%
Other income 119 8,187 (99%)
Share options costs (8,985) (9,209) 2%
General administrative and overhead
expenditure (17,849) (47,358) 62%
LOSS FROM OPERATIONS BEFORE INTEREST
AND TAXATION (50,323) (7,908) (536%)
Fair value adjustments and impairments
482 18,170 (97%)
Share in profit/(losses) from
associate investment 52,033 (118,517) 144%
Gain from partial sale of subsidiary
- 3,232,089 (100%)
Finance income 9,147 7,643 20%
Finance charges 11,548 (231,172) 105%
PROFIT/LOSS BEFORE TAXATION 22,887 2,900,305 (99%)
STATEMENT OF FINANCIAL POSITION
Total assets 4,340,004 4,080,093 6%
Cash and cash equivalents 1,020,569 842,679 21%
Current liabilities (382,151) (454,207) (16%)
Non-current liabilities (207,911) (204,110) 2%
Total equity (3,749,942) (3,421,776) (10%)
Conference Call
Simmers will conduct a conference call with investors to discuss the
information in this quarterly review at 09h00 local Toronto time and 15h00
local Johannesburg time today, Wednesday 19 August 2009. The conference call
will be available simultaneously to all interested analysts, investors and
media.
Dial-in details are as follows:
LIVE CALL
South Africa Toll:011 535 3600
Toll-free:0800 200 648
UK Toll-free:0800 917 7042
USA Toll:1 412 858 4600
Toll-free:1 800 860 2442
Canada Toll-free:1 866 519 5086
A digital replay of the teleconference will be available one hour after the
call for 72 hours. Thereafter it will be available on www.simmers.co.za
PLAYBACK - Code 2544#
South Africa & Other Toll:+ 27 11 305 2030
UK Toll-free:0808 234 6771
USA Toll:1 412 317 0088
Johannesburg
19 August 2009
Sponsor
Macquarie First South Advisers (Pty) Limited
ABOUT SIMMERS
The company is a gold and uranium company with operations in South Africa`s
Gauteng, North West and Mpumalanga provinces. The Group has two wholly-owned
gold operations: Buffelsfontein Gold Mine (BGM) in Stilfontein in the North
West Province and Transvaal Gold Mining Estates (TGME) in the Pilgrim`s
Rest/Sabie area of Mpumalanga. As at 30 June 2009, Simmers had a 37.24% stake
in Toronto Stock Exchange and JSE-listed FUI Corporation (First Uranium)
which has two projects: the Ezulwini gold and uranium mine near Westonaria in
Gauteng, and Mine Waste Solutions (MWS), a tailings re-treatment operation
that neighbours the BGM. For information on First Uranium`s year end results,
please refer to the MD&A and annual financial statements for the quarter
ending 30 June 2009 on their website hosted at www.firsturanium.com
FORWARD-LOOKING INFORMATION
This MD&A and financial statements for the quarter ended 30 June 2009 contain
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 Simmers 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 Simmers 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 Group`s`
expectations as at 14 August 2009; (ii) actual results may differ materially
from the Group`s expectations if known and unknown risks or uncertainties
affect its business, or if estimates or assumptions prove inaccurate; (iii)
the Group 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 Group 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.
Date: 19/08/2009 07:05:01 Produced by the JSE SENS Department.
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