| Mon 31 Aug 2009, 12:53 | | SIM - Simmer & Jack Mines Limited - Buffelsfontein Plans Reorganisation To |
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SIM
SIIF
SIM - Simmer & Jack Mines, Limited - Buffelsfontein Plans Reorganisation To
Safeguard Profitability
Simmer & Jack Mines, Limited
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" or "the Company")
NEWS RELEASE - 31 August 2009
BUFFELSFONTEIN PLANS REORGANISATION TO SAFEGUARD PROFITABILITY
Buffelsfontein Gold Mine ("BGM" or "the mine"), a wholly-owned subsidiary of
Simmer & Jack Mines, Limited, has formally advised organised labour of its
intention to begin an optimisation process aimed at returning the mine to
profitability.
For the quarter ended 30 June 2009, being the first quarter of FY2010, BGM went
from an operating profit of R52 million in the fourth quarter of FY2009 to a
loss of R9 million, despite a 3% increase in underground production.
The margin was severely impacted by the strong rand which reduced the rand gold
price received by 16%. This was exacerbated by a 12% increase in total cash
costs as a result of unprecedented increases in the costs of reagents, mining
and milling materials. Margins have been further eroded by the 32% power price
increase from power utility Eskom which came into effect on 1 July 2009. The
increased cash costs also include the annual wage increase which came into
effect in the June quarter.
"The strong rand has impacted heavily on Simmers` profitability and as announced
during our first quarter results, swift action is required to return this
operation to profitability. The harsh and inescapable reality is that under
current market conditions the Company cannot afford to subsidize under-
performing shafts or operations. Our primary objective remains the long-term
viability of this operation," said Gordon Miller, Simmers` chief executive
officer.
The mine will now begin the consultation process in terms of Section 189(a) of
the Labour Relations Act to determine where cost reductions can safely be
implemented and productivity improved in order to save as many as possible of
the 2 500 jobs that are expected to be affected by the rationalisation process.
The Company is hopeful that alternative employment might be found for some of
the affected employees, specifically at the Ezulwini Mine which is in an
intensive build-up phase as it gears up to increase underground production of
gold and uranium, as well as at the Weltevreden project, an up-dip extension of
the Tau Lekoa ore body which is being fast-tracked for development.
BGM currently employs 5 433 people, including contractors.
ABOUT SIMMERS
Simmers 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 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. The deal is subject to certain conditions precedent and is
expected to close in January 2010.
Johannesburg
31 August 2009
QUERIES:
Gail Strauss Nick Goodwin
+2782 936 8481 (mobile) +27836298605 (mobile)
gail@simmers.co.za nick@simmers.co.za
Date: 31/08/2009 12:53:01 Produced by the JSE SENS Department.
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