| Fri 19 Feb 2010, 7:29 | | SIM - Simmers Report For The Quarter Ended 31 December 2009 (Q3 Fy2010) |
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SIM
SIIF
SIM - Simmers Report For The Quarter Ended 31 December 2009 (Q3 Fy2010)
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")
SIMMERS REPORT FOR THE QUARTER ENDED 31 DECEMBER 2009 (Q3 FY2010)
SALIENT FEATURES
Post quarter-end resolution of shareholder dispute and appointment of
independent board
Management roles for Simmer and Jack Mines Limited (Simmers) and First Uranium
Corporation Limited (First Uranium) separated
Cash operating profit of ZAR8 million compared to loss of ZAR29 million in Q2
FY2010
Produced 903 kilograms (kg) down from 1,036 kg in Q2 FY2010
Total cash costs decreased by 17% to ZAR230 million (Q2 FY2010: ZAR276 million)
Revenue down 3% to ZAR238 million (Q2 FY2010: ZAR247 million)
Cash and cash equivalents of ZAR739 million which excludes the ZAR160 million
credit loan facility granted to First Uranium) (ZAR787 million in Q2 FY2010)
OPERATIONAL DEVELOPMENTS
At Buffelsfontein Gold Mine (Buffelsfontein):
- Gold production of 838.13 kg in line with guidance
- Rationalisation process successfully completed
- Total cash costs decreased by 16%
- Production from surface sources up 37%
- Underground grade up 9%
- Five shaft rehabilitation project completed within budget
- Opening-up and development operations to access the 77-level haulage pillar
has commenced
At Tau Lekoa Mine (Tau Lekoa):
- Period for completion of acquisition extended by six months
to September 2010
- Production exceeded Simmers` planned forecasts
- Simmers` team in place and shadow-managing operations in anticipation of
taking ownership of Tau Lekoa
- Investigations of economic potential of Weltevreden ongoing
- De-watering of Weltevreden twin-decline 70% complete
- Underground infrastructure revealed to be in good condition
44 of 46 drill holes completed;
- Phase 1 of the pre-feasibility study to be re-defined following results of
the drill programme
- Pre-feasibility study for Weltevreden project due in Q1 FY2011
At Transvaal Gold Mining Estates (TGME):
- Excellent safety performance
- Total cash costs down by 21%
- Production from surface operations only
- Heavy and sustained rainfall impacts on leaching and operations
- Gold production down 11% to 65 kg
POST PERIOD-END:
New, independent board with strong mining skills appointed at general meeting of
shareholders on Monday, 1 February 2010
First meeting of new board held on Tuesday, 2 February 2010:
- Vusi Khanyile appointed chairman
- Bernard Swanepoel appointed deputy chairman
- Deon van der Mescht appointed Chief Executive Officer (CEO)
- Investment committee appointed to focus on optimising Simmers` investment
in First Uranium
- Buffelsfontein confident of showing a return to profitability in the last
month of the fourth quarter (March 2010), following the successful completion of
the restructuring process
- Renewed engagement with AngloGold Ashanti Limited (AngloGold Ashanti) and
the Department of Mineral Resources (DMR) to expedite transfer of Tau Lekoa
mining right
- Future of TGME under review
STATEMENT BY THE CHIEF EXECUTIVE OFFICER
The long running dispute with Simmers` largest shareholder and black economic
empowerment (BEE) partner, Vulisango Holdings (Pty) Limited (Vulisango), has
been resolved. On Monday, 1 February 2010, shareholders voted overwhelmingly in
favour of a new board that had been agreed upon between Simmers and its two
largest shareholders, Vulisango and Rand Merchant Bank (RMB). The board is
independent, in line with the guidelines of the King Code of Corporate
Governance III, and comprises significant mining expertise as well as valuable
experience in the management of a public company.
This is welcome news for allSimmers stakeholders, notably Simmers` employees who
are keen to see management resume their focus on operational issues. The
shareholder dispute has had an extremely negative effect on employee morale.
Now that it has been resolved, my focus as the newly appointed CEO will be on
improving internal communications, recognising and rewarding excellence within
the organisation, and ensuring that staff are focused on delivering on our
commitments to shareholders. Creating an environment in which people can excel
and that will result in the achievement of goals, and ultimately the creation of
value for all stakeholders, will be a major part of my role as CEO. This means
going back to basics and addressing core values around safety and well-being,
costs and revenue. To address previous management inaccuracies which have
created a perception of over- promising and under-delivery, we are in the
process of reviewing the guidance protocol. All updated mine plans are
currentlyundergoing a review process at mine level, prior to sign-off by the
executive committee and the board to ensure the requisite buy-in and commitment
to execution of plans. These updated technical reports will form the basis of
our production guidance going forward. We have also instituted very specific
operational changes in order to support and assist our senior production
managers to meet their targets. This includes the establishment of a division to
handle the technical and support services required to run a mine successfully.
Despite a challenging period there were some positive developments. Costs are
going in the right direction and the focus at operational level is finally
beginning to shift from tonnage to grade in our bid to mine profitable ounces,
even if it means producing less gold. Buffelsfontein, which currently produces
around 92% of Simmers` gold, will see a return to profitability in March 2010,
barring unforeseen glitches.
Following the first board meeting of the new Simmers board on Tuesday, 2
February 2010, the board formed an investment committee headed by deputy
chairman, Bernard Swanepoel, to review Simmers` holding in First Uranium in the
light of First Uranium`s recent disclosures on the Securities Exchange News
Service SENS regarding the change to its production and capital schedule. The
disclosures followed the withdrawal of its environmental permit to build a
tailings storage facility (TSF) at its Mine Waste Solutions project (MWS). The
investment committee is assessing the impact of the latest developments and will
advise the board accordingly. Simmers is willing and able to participate in the
recapitalisation of First Uranium, subject to the value proposition being
proven.
At Tau Lekoa, we have reached agreement with AngloGold Ashanti to extend the
interim contract period to September 2010 in order to accommodate any further
delay in the permitting process. The terms of the acquisition agreement
stipulate that any cash profit earned in the interim period will be deductable
from the purchase price of ZAR600 million. The estimated cash profit for the
2009 calendar year is expected to be in the region of ZAR100 million. This cash
profit will continue to accumulate until the acquisition is completed.
The integration of Tau Lekoa into Buffelsfontein continues as planned and
Simmers, in co-operation with AngloGold Ashanti, will continue to shadow-manage
operations at Tau Lekoa until the acquisition is completed.
At TGME results have been disappointing. The time has come to review the future
of this operation in light of the ongoing financial losses incurred and the
capital required to realise the prospective potential of TGME. The operation is
consuming a disproportionate amount of management time and resources in relation
to its size. We therefore intend embarking on a consultative process in terms of
section 189a of the Labour Relations Act, 66 of 1995, to further restructure and
down-size this operation. This will allow us to focus on regional consolidation
in the North West Province which is where we believe the best returns on our
investment are to be found.
SALIENT FEATURES
Table 1 - Summary of group salient features
Quarter Simmers YTD
Q3 FY2010 Q2 FY2010 Detail Unit FY2010 FY2009
903 1,036 Gold produced kg 2,965 2,978
694,161 583,212 Tonnes milled t 1,825,628 1,624,941
263,761 238,248 Revenue ZAR/kg 248,466 230,210
254,972 266,345 Total cash costs ZAR/kg 260,648 232,102
321,937 323,777 Notional cash ZAR/kg 311,785 265,198
expenditure
332 473 Total cash costs ZAR/t 423 425
7,939 (29,103) Cash operating ZAR`000 (36,120) (5,636)
profit/(loss)
FINANCIAL OVERVIEW
Financial results for the year to date FY2009 and the year to date FY2010 are
not comparable given the change in relationship between Simmers and First
Uranium from that of a subsidiary to an associate company which took place at
the end of Q4 FY2009. This change in accounting disclosure affects all the line
items in the Statement of Comprehensive Income and Statement of Financial
Position.
As expected, total gold production was down 13% from 33,301 ounces (oz)
(1,036kg) to 29,040 oz (903 kg) in Q3 FY2010. This was as a consequence of the
shaft rationalisation process at Buffelsfontein and the shift in focus to
profitable ounces. This translated into gold revenue of ZAR238 million, compared
to ZAR247 million in the previous quarter. Unit cash costs declined 4% from
ZAR266,345/kg to ZAR254,972/kg.
The bottom-line loss before taxation narrowed by 25% from ZAR147 million for Q3
FY2010 to ZAR110 million for the period under review. Costs were reduced by
ZAR45.6 million, due to decreased gold production and a decrease in unit costs.
Dealing with our two operations separately, at Buffelsfontein revenue was down
4% from ZAR229 million to ZAR221 million as a result in a reduction in ounces.
The ZAR26 million operating loss in Q2 FY2010 was converted into an operating
profit of ZAR7 million in Q3 FY2010 on the back of the stronger ZAR/kg gold
price and a 16% decrease in total cash costs, from ZAR248 million in Q2 FY2010
to ZAR208 million. The ZAR40 million reduction in total cash costs was
partially the result of a 38% drop in electricity costs. In addition the
rationalisation programme achieved real costs savings in labour, consumables,
contractors and suspending production from unprofitable areas. These measures,
combined with the higher volumes from the high grade Number 5 shaft improved
underground grades by 9%.
Gold revenue for TGME decreased quarter-on-quarter from ZAR17.3 million to
ZAR17.2 million due to a volume decrease of 8 kg as a result of the suspension
of underground operations during July 2009 which was mitigated by an 11%
increase in the ZAR/kg gold price. The reduced volumes created a revenue
variance of ZAR2 million, quarter-on-quarter, and the increased gold price had a
positive effect of ZAR1.9 million on total revenue.
Overall gold production showed no significant change year-on-year at a total of
95,335 ounces (oz) (2,965kg). Due to an improved exchange rate, gold revenue was
up 7% from ZAR686 million to ZAR737 million. Total cash costs rose 17% from
ZAR691 million to ZAR773 million. The cash operating loss widened from
ZAR6 million to ZAR36 million.
As at 31 December 2009, Simmers reported total assets of ZAR4.1 billion, total
liabilities of ZAR561 million, shareholders` equity of ZAR3.5 billion and cash
and cash equivalents of ZAR739 million, compared to ZAR787 million at the end of
Q2 FY2010. Cash and cash equivalents exclude the ZAR160 million facility to
First Uranium which was granted by Simmers to First Uranium in Q2 FY2010.
OPERATIONAL REVIEW
Safety
It is with regret that Buffelsfontein reported the death of one employee during
the quarter. Mr Simphiwe Mbotho of Bizana in the Eastern Cape died on 16
November 2009 following injuries sustained by a falling rock on 4 November 2009.
Simmers remains committed to zero harm and to upholding the safest possible
working environment. Our greatest sympathies are with the family and friends of
Mr Mbotho.
Buffelsfontein
Buffelsfontein produced 26,947 oz (838 kg) in Q3 FY2010; a 13% decrease on the
30,961 oz (963 kg) of gold produced in Q2 FY2010. The rationalisation process
initiated at the end of August 2009, was completed in the third quarter and cost
savings have been achieved. As expected, production fell by 13% quarter-on-
quarter due to reduced tonnage as part of the shaft rationalisation programme
aimed at reducing total cash costs by suspending production from unprofitable
areas. In total, Buffelsfontein produced 26,947 oz (838 kg) of gold compared to
30,961 oz (963 kg) produced in Q2 FY2010.
TGME
At TGME gold production was down 255 oz (7.9 kg) quarter-on-quarter due to the
suspension of underground operations in Q2 FY2010, and abnormally high rain fall
during November 2009 and the first half of December 2009. This resulted in
dilution of the leach pad solution and interruptions to the tramming and
crushing operations in the plant.
At Elandsdrift Heap Leach Pad (HLP) production increased by 286 oz (8.9 kg) from
599 oz (18.6kg) to 885 oz (27.5kg) but was below forecast by 305 oz (9.5kg) due
to the dilution effect of the excessive rain. The top of the HLP has been
covered with a high-density polyethylene (HDPE) lining to divert excess rain
from the pad.
Gold production from the rock dumps and other sources increased by 276 oz
(8.6kg) from 932 oz (29kg) to 1,208 oz (37.6 kg) but was 643 oz (20kg) below
guidance. This was due to the excessive rain which resulted in 14 days lost
where no screening could be done at the sites, five days where no tramming of
the screened material could be done and numerous plant stoppages.
Weltevreden
Simmers earlier announced a multi-staged approach to the development of the
Weltevreden resource with the aim of progressively funding development from
internal cash resources.
During Q3, all assay results for phase one of the Weltevreden scoping study were
subjected to internal resource modelling by Simmers, which reduced the mineable
area within phase one by 70%. As a result, the scoping study has been revised
from positive to negative for the area initially deemed to comprise phase one.
A total of 44 of the 46 drill holes planned for the entire Weltevreden project
had been completed by the end of Q3. The remaining two drill holes will be
completed in the current quarter and assay results for the remaining holes
outside of the area defined as phase one are expected towards the middle of Q4.
Once all results are received, the Weltevreden mineral resource will be
remodelled and trade-offs conducted to determine the optimal method of accessing
the economic mineral resources.
It is anticipated that a pre-feasibility report on the entire Weltevreden
project (comprising various phases) will be completed by the end of Q1 FY2011.
Depending on the outcome, the pre-feasibility report will be followed by a
definitive feasibility report.
Table 2 - Simmers` selected financial information
Simmers Q3 FY2010 Q2 FY2010 Variance Q3
v Q2
Selected financial information ZAR`000 ZAR`000 %
Statement of comprehensive income
Revenue 238,240 246,774 (3%)
Total cash cost (230,301) (275,877) 17%)
Production-related depreciation (11,142) (10,936) (2%)
Operating profit/(loss) from mining
activities (3,204) (40,039) 92%
Non-production related depreciation (1,515) (1,508) (0%)
Other income 2,787 1,842 51%
Restructuring costs (4,770) (3,089) (54%)
Share option costs (6,129) (9,118) 33%
General administrative and overhead
expenditure (27,267) (26,792) (2%)
(Loss) from operations before
interest and taxation (40,098) (78,704) 49%
Fair value adjustments & impairments
133 482 72%
Share in profit/(losses) from
associate investments (101,670) (97,563) (4%)
Finance income & dividends 36,770 32,149 (14%)
Finance charges (5,298) (3,208) (65%)
Profit/(loss) before taxation (110,164) (146,844) 25%
Statement of financial position
Total assets 4,099,423 4,200,722 (2%)
Cash and cash equivalents 738,675 787,423 (6%)
Investments in and loans to
associates 2,166,296 2,245,833 (4%)
Current liabilities (130,767) (158,833) 18%
Non-current liabilities (430,646) (430,916) 0%
Total equity (3,538,010) (3,610,974) (2%)
(Continued)
Simmers YTD FY2010 YTD FY2009
ZAR`000 ZAR`000
Selected financial information
Statement of comprehensive income
Revenue 736,768 964,580
Total cash cost (772,887) (896,827)
Production-related depreciation (32,274) (20,993)
Operating profit/(loss) from mining activities (68,394) 46,761
Non-production related depreciation (4,358) (7,506)
Other income 7,626 10,244
Restructuring costs (7,859) -
Share option costs (24,232) (101,155)
General administrative and overhead expenditure (71,908) (164,050)
(Loss) from operations before interest and (169,125) (215,705)
taxation
Fair value adjustments & impairments 1,096 (4,232)
Share in profit/(losses) from associate (147,200) -
investments
Finance income & dividends 127,839 52,225
Finance charges (46,731) (123,302)
Profit/(loss) before taxation (234,121) (291,015)
Statement of financial position
Total assets 4,099,423 4,470,194
Cash and cash equivalents 738,675 430,411
Investments in and loans to associates 2,166,296 -
Current liabilities (130,767) (716,839)
Non-current liabilities (430,646) (1,647,979)
Total equity (3,538,010) (2,105,377)
* Cash and cash equivalents exclude the ZAR160 million facility by Simmers to
First Uranium but includes the ZAR450 million which is restricted cash against
the guarantee in favour of AngloGold Ashanti for the purchase of Tau Lekoa.
Table 3 - Simmers` quarterly group variance analysis
Revenue variance
Period kg Price ZAR/kg Revenue ZAR`000
Q3 FY 2010 903 263,761 238,240
Q2 FY 2010 1,036 238,245 246,774
Total (133) 25,514 (8,534)
Period Volume variance Price variance Revenue variance
R`000 R`000 R`000
Q3 v Q2 (34,961) 26,427 (8,534)
(Continued)
Cash cost variance
Period kg Cost ZAR/kg Cash cost Total
variance
ZAR`000 ZAR`000
Q3 FY 2010 903 254,972 230,301 7,939
Q2 FY 2010 1,036 266,342 275,877 (29,103)
Total (133) (11,370) (45,576) 37,042
Period Volume Unit cost Cost variance Total
variance variance variance
ZAR`000 ZAR`000 ZAR`000 ZAR`000
Q3 v Q2 (33,799) (11,777) (45,576) 37,042
* Total cash costs are costs directly related to the physical activities of
producing gold and include mining costs, administrative costs; royalties, on-
mine drilling expenditures that are related to production and other direct
costs. Sales of by-product metals are deducted from the above in computing cash
costs. Cash costs exclude depreciation, depletion and amortisation, corporate
general and administrative expense, exploration costs, interest costs, and pre-
feasibility costs and accruals for mine reclamation but include central costs
such as human resources, technical services etc.
BUFFELSFONTEIN GOLD MINES LIMITED (BGM or Buffelsfontein)
Buffelsfontein is a wholly-owned subsidiary of Simmers, located in the
Klerksdorp Goldfield of the Witwatersrand basin, some 160 kilometres (km) south-
west of Johannesburg and exploits the Vaal Reef conglomerate for its gold
production. The current focus is on the regional integration of Tau Lekoa into
Buffelsfontein.
Table 4 - Summary of Buffelsfontein salient features
BGM UNIT Q3 FY2010 Q2 FY2010 Variance Q3
v Q2
Gold produced Kg 838 963 (13%)
Tonnes milled t 677,991 579,171 17%
Revenue ZAR`000 220,994 229,434 (4%)
Total cash costs ZAR`000 208,455 248,134 16%
Capex ZAR`000 44,412 36,695 (21%)
Notional cash expenditure ZAR`000 252,866 284,829 11%
Revenue ZAR/kg 263,676 238,252 11%
Toatal cash costs ZAR/kg 248,714 257,670 3%
Capex ZAR/kg 52,989 38,105 (39%)
Notional cash expenditure ZAR/kg 301,703 295,775 (2%)
(Continued)
BGM UNIT YTD FY2010 YTD FY2009
Gold produced Kg 2,721 2,758
Tonnes milled t 1,791,824 1,584,588
Revenue ZAR`000 676,035 633,764
Total cash costs ZAR`000 685,057 604,576
Capex ZAR`000 100,512 65,065
Notional cash expenditure ZAR`000 785,569 669,641
Revenue ZAR/kg 248,462 229,813
Toatal cash costs ZAR/kg 251,778 219,230
Capex ZAR/kg 36,941 23,594
Notional cash expenditure ZAR/kg 288,719 242,823
Table 5 - Summary of salient production metrics for Buffelsfontein
BGM Unit Q3 FY2010 Q2 FY2010 Variance
Q3 v Q2
Face length (Ave) m 1,354 1,694 (20%)
Face advance (Ave) m 10 11 (9%)
Stoping m2 broken m2 40,966 56,137 (27%)
Development m 1,031 1,734 (41%)
Opening-up (All) m 2,854 5,208 (45%)
Tonnes milled U/G t 178,488 243,396 (27%)
Yield per tonne U/G g/t 3.74 3.45 9%
Gold produced U/G kg 668 839 (20%)
oz 21,483 26,966 (20%)
Tonnes milled Surf t 499,503 335,775 49%
Yield per tonne Surf g/t 0.34 0.37 (8%)
Gold produced Surf kg 170 124 37%
oz 5,463 3,994 37%
Total tonnes milled t 677,991 579,171 17%
Total yield per tonne g/t 1.24 1.66 (26%)
Total gold produced kg 838 963 (13%)
oz 26,947 30,961 (13%)
(Continued)
BGM Unit YTD FY2010 YTD FY2009
Face length (Ave) m 1,579 1,771
Face advance (Ave) m 10.42 9.39
Stoping m2 broken m2 148,332 149,708
Development m 4,579 5,273
Opening-up (All) m 11,906 15,588
Tonnes milled U/G t 638,099 657,353
Yield per tonne U/G g/t 3.61 3.61
Gold produced U/G kg 2,305 2,371
oz 74,108 76,229
Tonnes milled Surf t 1,153,725 927,235
Yield per tonne Surf g/t 0.36 0.42
Gold produced Surf kg 416 387
oz 13,370 12,442
Total tonnes milled t 1,791,824 1,584,588
Total yield per tonne g/t 1.52 1.74
Total gold produced kg 2,721 2,758
oz 87,478 88,672
Further costs savings are expected to be achieved once Tau Lekoa is integrated
into Buffelsfontein. This was expected to have taken place by 1 January 2010,
but has been deferred due to the transfer of the mining right not yet having
been approved by the DMR. The cut-off date provided for in the acquisition
agreement has therefore been extended by mutual agreement until 30 September
2010, to allow sufficient time for the mining right transfer to take place.
As part of the shaft rationalisation process aimed at reducing overhead costs,
the Numbers 9 and 12 shafts were closed and activities previously associated
with these shafts are now routed via Number 10 shaft. In Q3 FY2010, the low-
grade Number 8 shaft was put on care-and-maintenance and low-grade areas of the
Number 7 shaft were closed. These measures, combined with the higher volumes
from the high grade Number 5 shaft, improved underground grades by 9%.
The shaft rationalisation process reduced underground tonnage quarter-on-quarter
by 27%, resulting in a 20% decrease in gold recovered from underground.
The 49% increase in tonnage milled from surface sources and the 37% increase in
gold recovered is as a direct result of the mini float project which was
commissioned in the second quarter. However, a drop in grade in the Number 10
shaft waste rock dump reduced the recovered surface grade by 8%.
Buffelsfontein capital projects
The highlight of the third quarter was the completion of the rehabilitation
project to restore the high grade Number 5 shaft to full operational capacity.
The final leg of the three-phase project which commenced in July 2008, was
completed at the end of October 2009, with the completion of the Number 5 shaft
ore-handling project, which introduced an efficient ore-handling system and the
commissioning of the Number 5A sub-vertical shaft refrigeration project in
September 2009.
The Number 7 box on 29 level has since been installed and commissioned and the
development of the 72 level X/belt winze is nearing completion. This will
accelerate opening-up operations towards the 72-level North ore reserve
extension.
Following the commissioning of the refrigeration plant, the opening-up and
development operations on 77-level to access the 77-level haulage pillar has
commenced.
Financials
Q3 FY2010 v Q2 FY2010
Buffelsfontein produced 26,947 oz (838 kg) in Q3 FY2010, a 13% decrease on the
30,961 oz (963 kg) of gold produced in Q2 FY2010. Revenue was down 4% from
ZAR229 million to ZAR221 million. Of the ZAR8.4 million decrease in revenue,
ZAR32.9 million is due to decreased volumes (4,014 oz or 124.86 kg less gold
produced in Q3 FY2010) while ZAR24.5 million was due to a 10.7% increase in the
South African rand gold price per kilogram.
Table 6 - Quarter variance analysis for Buffelsfontein
Revenue variance
Period kg Price ZAR/kg Revenue ZAR`000
Q3 FY 2010 838 263,676 220,994
Q2 FY 2010 963 238,252 229,434
Total (125) 25,424 (8,440)
Period Volume variance Price variance Revenue variance
ZAR`000 ZAR`000 ZAR`000
Q3 v Q2 (32,923) 24,483 (8,440)
(Continued)
Cash cost variance
Period kg Cost ZAR/kg Cash cost Total
variance
ZAR`000 ZAR`000
Q3 FY 2010 838 248,714 208,455 12,540
Q2 FY 2010 963 257,670 248,134 (18,700)
Total (125) (8,956) (39,679) 31,240
Period Volume Unit cost Cost variance Total
variance variance variance
ZAR`000 ZAR`000 ZAR`000 ZAR`000
Q3 v Q2 (31,055) (8,625) (39,679) 31,240
The ZAR19 million cash operating loss in Q2 FY2010 was converted into a cash
operating profit of ZAR13 million in Q3 FY2010 on the back of the stronger
ZAR/kg gold price (ZAR263,676/kg v ZAR238,252/kg) and a 16% decrease in total
cash costs, from ZAR248 million (US$1,024/oz) in Q2 FY2010 to ZAR208 million
(US$1,029/oz). The ZAR40 million reduction in total cash costs was partially
the result of a ZAR18 million or 38% drop in electricity costs following Eskom`s
switch from higher winter rates at the end of Q2 to its summer rates and,
partially as a result of the rationalisation programme which achieved the
following costs savings:
a ZAR20 million decrease in labour costs (17.5%);
consumables cut by ZAR5.4 million or 11%; and
contractor costs cut by ZAR8.3 million or 23% (mainly as a result of the mini
float project that made the screening of material associated with the Number 10
waste rock dump superfluous).
The lower expenditure was partially offset by the decrease in gold inventory
from 1,217 oz (37.85 kg) in Q2 to 635 oz (19.74 kg) at the end of Q3 FY2010 by
ZAR1.3 million.
Buffelsfontein`s capital expenditure increased from ZAR37 million in Q2 FY2010
to ZAR44 million in Q3 FY2010. The main additions to fixed assets include
ZAR19 million for the integration of Tau Lekoa, ZAR11.7 million expenses
capitalised on the Weltevreden project, ZAR3.8 million for development and
opening-up to increase flexibility of mineable face length, ZAR1.8 million
toward the refurbishment of Number 5 shaft with a further ZAR1.2 million on
Number 5 shaft refrigeration plant, ZAR1 million on compressor repairs, and
ZAR3.2 million on the mini float and mini float B bank project to optimise the
plant to its fullest capacity to be able to treat 240,000 tonnes per month.
Year-to-date FY2010 v year-to-date FY2009
Underground production declined marginally from 88,663 oz (2,758 kg) to
87,478 oz (2,721 kg) due to a 11% and 1% decrease in face length and stoping
square meters (m2) broken respectively. Recovered yield however, was up by 9%.
Table 7 - Statement of Comprehensive Income for Buffelsfontein
BGM Q3 FY2010 Q2 FY2010 Variance
Q3 v Q2
Selected Financial information ZAR`000 ZAR`000 %
Statement of comprehensive income
Revenue 220,994 229,434 (4%)
Total cash cost (208,455) (248,134) 16%
Production-related depreciation (5,684) (7,349) 23%
Operating profit/(loss) from mining
activities 6,855 (26,049) 126%
Other income 2,782 1,834 52%
Restructuring costs (4,025) (57) (6964%)
Share option costs (2,321) (3,588) 35%
General administrative and overhead
expenditure (6,970) (7,220) 3%
(Loss) from operations before interest
and taxation (3,678) (35,079) 90%
Fair value adjustments & impairments 133 482 72%
Finance income & dividends 3,266 3,265 0%
Finance charges 8,978 (8,231) 209%
Profit/(loss) before taxation 8,698 (39,563) 122%
(Continued)
BGM YTD FY2010 YTD FY2009
Selected financial information ZAR`000 ZAR`000
Statement of comprehensive income
Revenue 676,035 633,764
Total cash cost (685,057) (604,576)
Production-related depreciation (19,637) (13,093)
Operating profit/(loss) from mining activities (28,659) 16,095
Other income 6,140 4,339
Restructuring costs (4,082) -
Share option costs (9,284) (17,324)
General administrative and overhead expenditure (24,161) (23,404)
(Loss) from operations before interest and
taxation (60,046) (20,295)
Fair value adjustments & impairments 1,096 -
Finance income & dividends 9,780 15,282
Finance charges 45,517 (38,689)
Profit/(loss) before taxation (3,652) (43,702)
Buffelsfontein generated gold revenues of ZAR676 million for the nine months
ended December 2009 compared to ZAR634 million for the equivalent period in the
previous financial year. The ZAR42 million increase in revenue was a direct
result of an 8% improvement in the ZAR/kg gold price to the value of
ZAR51.5 million, which was offset by ZAR9.2 million due to the lower gold
production.
Total cash costs increased by 13% from ZAR605 million (US$801/oz) for the nine
months in FY2009 to ZAR685 million (US$985/oz). This ZAR80 million increase is
as a result of higher unit costs which were affected by two increases in the
cost of electricity: a 13.3% annual increase effective as of 1 January 2009 and
a 31.3% increase on the standard tariff with effect from 1 July 2009. In
addition, the two year wage increase concluded with organised labour increased
the labour bill by ZAR28 million for the nine month period.
As a result of year-to-date cash costs rising from ZAR605 million to
ZAR685 million and revenue increasing from ZAR634 million to ZAR676 million,
Buffelsfontein`s operating loss from mining activities widened from a profit of
ZAR16 million to a loss of ZAR29 million for the year-to-date. The current
rationalisation programme is designed to reverse this loss-making situation.
Table 8 - Year-to-date variance analysis for Buffelsfontein
Revenue variance
Period kg Price ZAR/kg Revenue ZAR`000
FY2010 YTD 2,721 248,462 676,035
FY2009 YTD 2,758 229,791 633,764
Total (37) 18,671 42,271
Period Volume variance Price variance Revenue variance
ZAR`000 ZAR`000 ZAR`000
FY2010 v FY2009 (9,223) 51,493 42,271
(Continued)
Cash cost variance
Period kg Cost ZAR/kg Cash cost Total variance
ZAR`000 ZAR`000
Q3 FY 2010 2,721 251,778 685,057 (9,022)
Q2 FY 2010 2,758 219,208 604,576 29,188
Total (37) 32,570 80,481 (38,210)
Period Volume Unit cost Cost variance Total variance
variance variance ZAR`000 ZAR`000
ZAR`000 ZAR`000
Q3 v Q2 (9,346) 89,827 80,481 (38,210)
Outlook Q4 FY2010
In Q4 FY2010, Buffelsfontein expects to produce between 23,800 oz (740kg) and
25,700 oz (800kg) at average cash costs of around US$1,090/oz and ZAR270,000/kg,
assuming an average exchange rate of ZAR7.70 to the US$, assuming the
integration of Tau Lekoa does not take place in the fourth quarter.
TAU LEKOA MINE (Tau Lekoa)
On 17 February 2009, Simmers announced the acquisition of AngloGold Ashanti`s
Tau Lekoa mine near Orkney in the North West Province. At the time, it was
anticipated that the earliest effective date for the completion of the
acquisition would be on or about 1 January 2010. However, the acquisition
agreement did contemplate a possible cut-off date of 31 March 2010 which could
be extended by agreement between Simmers and AngloGold Ashanti.
As at 31 December 2009, all suspensive conditions to the acquisition save for
the approval of the DMR for the transfer of the applicable mining rights had
been fulfilled. The application for the transfer was submitted to the DMR during
Q2 FY2010 and DMR approval is now expected to occur during 2010.
As a consequence, the parties have mutually agreed to extend the agreement to 30
September 2010, in order to accommodate any further delay in the permitting
process.
The integration of Tau Lekoa into Buffelsfontein is expected to reduce total
costs at Tau Lekoa by approximately 20%, which equates to around ZAR100 million
per annum.
An updated life of mine (LOM) plan for the project has been completed and is
undergoing independent verification and a peer review process, whereupon it will
be published.
In addition to providing substantial free cash inflow to Buffelsfontein over the
next three years, the acquisition also includes the Weltevreden resource, a
shallow, up-dip extension of Tau Lekoa lying between 80 and 300 metres below
surface. Development of this 2.3 million ounce resource will significantly
extend the life of the Tau Lekoa operation to 2024.
Production update
Tau Lekoa exceeded production expectations and declared 33,565 oz (1,044kg) of
gold for the quarter. For the next quarter (Q4 FY2010), Tau Lekoa expects to
produce between 30,000 oz (933kg) and 32,500oz (1,020kg). Upon the integration
of Tau Lekoa with Buffelsfontein, cash costs are expected to be between
ZAR180,995/kg and ZAR200,000/kg
Tau Lekoa capital projects
Weltevreden
Simmers earlier announced a multi-staged approach to the development of the
Weltevreden resource with the aim of progressively funding development from
internal cash resources.
Phase one of the project was selected on the basis that the area under
consideration did not require additional deepening of the decline and could
provide access to the Ventersdorp Contact Reef (VCR) along a strike length of
4,000 metres (m) from 160 m below surface to 300 m below surface. Additionally,
95% of the mineable area within phase one contained the higher grade Middle
Terrace Conglomerate (MTC) facies.
Drilling programme
A scoping study using the AngloGold Ashanti mineral resources, geological
structure and sedimentological facies models for Weltevreden, indicated that the
area had economic potential. Since the majority of the Weltevreden mineral
resource was classified as an indicated three resource by AngloGold Ashanti, the
mineral resources had to be upgraded to a more acceptable measured or indicated
resource level. As part of the due diligence process, a 46 hole surface
exploration programme was initiated at the end of Q2 FY2010 with the intention
of reducing the gaps in the existing surface drill hole footprint and upgrading
the level of confidence in the mineral resources. The area defined as phase one
had a total of 19 surface drill holes within its limits.
During Q3 FY2010, all assay results for phase one were subjected to internal
resource modelling by Simmers, which reduced the mineable area within phase one
by 70%. As a result, the scoping study has been revised from positive to
negative for the area initially deemed to comprise phase one.
Forty four of the 46 drill holes planned for the entire Weltevreden project had
been completed by the end of Q3FY2010. The remaining two drill holes will be
completed in the current quarter and assay results for the remaining holes
outside of the area defined as phase one are expected towards the middle of Q4
FY2010. Once all results have been received, the Weltevreden mineral resource
will be remodelled and trade-offs conducted to determine the optimal method of
accessing the economic mineral resources.
The pre-feasibility report for phase one, which was due for release in the
middle of Q3, will therefore be delayed until completion of the surface drilling
program and the completion of a South African Mineral Resource Committee
(SAMREC) and National Instrument 43-101 (NI 43-101) compliant technical report
on the updated mineral resources of the Weltevreden project.
It is anticipated that a pre-feasibility report on the entire Weltevreden
project (comprising various phases) will be completed by the end of Q1 FY2011.
Depending on the outcome, the pre-feasibility report will be followed by a
definitive feasibility report.
Dewatering programme
Two hundred mega-litres of water were removed from the flooded twin decline
system in Q3 FY2010. By the end of December 2009, the water level had dropped to
50m below Lateral Number 12, which equates to 70% of the decline system. Weekly
water sampling to assess pH, electrical conductivity and total dissolved solids,
was conducted and showed no anomalies.
With dewatering came the need to increase safety procedures. A baseline risk
assessment was completed for the Weltevreden project and an issue based risk
assessment was conducted to operate an load haul dump (LHD) and Landcruiser down
to Lateral Number 8. Gas testing equipment and a lamp room (with tester) were
commissioned while two surface 45 kilowatt fans were installed on top of the up-
cast ventilation shaft. Two ventilation doors have been installed in the raw
decline and two "physicals audits" were also conducted.
With the removal of the reeds and mud from the portal entrance, the crew were
able to clean and wash the portal area of all mud and dirt. Security gates were
installed and the Banksman`s cabin erected at the entrance to the portal.
TRANSVAAL GOLD MINING ESTATES LIMITED (TGME)
Overview
TGME is situated in the Sabie/Pilgrim`s Rest goldfield of Mpumalanga,
approximately 450 km north-east of Johannesburg. The current project area
extends over a distance of approximately 70 km north-south and 25 km east-west
and more than 40,000 hectares (ha) of new order prospecting rights (NOPR) and
10,800 ha of new order mining rights (NOMR) have been secured. In FY2009, it
accounted for 7% of Simmers` gold production.
Table 9 - Summary of TGME salient features
TGME Unit Q3 FY2010 Q2 FY2010 Variance Q3
v Q2
Gold produced kg 65 73 (11%)
Tonnes milled t - 4,041 (100%)
Revenue ZAR`000 17,245 17,340 (1%)
Total cash costs ZAR`000 21,846 27,743 21%
Capex ZAR`000 16,074 22,792 29%
Notional cash expenditure ZAR`000 37,920 50,535 25%
Revenue ZAR/kg 264,861 238,194 11%
Toatal cash costs ZAR/kg 335,529 381,103 12%
Capex ZAR/kg 246,875 313,094 21%
Notional cash expenditure ZAR/kg 582,403 694,197 16%
(Continued)
TGME Unit YTD FY2010 YTD FY2009
Gold produced kg 244 221
Tonnes milled t 33,804 40,353
Revenue ZAR`000 60,733 51,914
Total cash costs ZAR`000 87,830 86,737
Capex ZAR`000 51,125 33,511
Notional cash expenditure ZAR`000 138,955 120,248
Revenue ZAR/kg 248,518 235,161
Toatal cash costs ZAR/kg 359,402 392,904
Capex ZAR/kg 209,202 151,800
Notional cash expenditure ZAR/kg 568,604 544,704
Table 10 - Summary of salient production metrics for TGME
TGME Unit Q3 FY2010 Q2 FY2010 Variance
Q3 v Q2
Face length (Ave) m - 283 (100%)
Face advance (Ave) m - 5.40 (100%)
Stoping m2 broken m2 - 1,537 (100%)
Development m 40 245 (84%)
Tonnes milled U/G t - 4,041 (100%)
Yield per tonne U/G g/t - 6.23 (100)%
Gold produced U/G kg - 25 (100%)
oz - 809 (100%)
Gold produced HLP kg 28 19 48%
oz 884 599 48%
Gold produced Other kg 38 29 30%
oz 1,209 932 30%
Total gold produced kg 65 73 (11%)
oz 2,093 2,341 (11%)
(Continued)
TGME Unit YTD FY2010 YTD FY2009
Face length (Ave) m 591 319
Face advance (Ave) m 13.55 6.60
Stoping m2 broken m2 8,007 19,095
Development m 988 778
Tonnes milled U/G t 17,634 40,353
Yield per tonne U/G g/t 5.87 5.01
Gold produced U/G kg 104 202
oz 3,330 6,498
Gold produced HLP kg 74 19
oz 2,385.91 610.00
Gold produced Other kg 67 -
oz 2,141.24 -
Total gold produced kg 244 221
oz 7,857 7,108
Production summary
Gold production was down 255 oz (7.9kg) quarter-on-quarter due to the suspension
of underground operations in Q2 FY2010 and abnormally high rain fall during
November 2009 and the first half of December 2009. This resulted in dilution of
the leach pad solution and interruptions to the tramming and crushing operations
in the plant.
At Elandsdrift HLP production increased by 286 oz (8.9kg) from 599 oz (18.6kg)
to 885 oz (27.5kg) but was below forecast by 305 oz (9.5kg) due to the dilution
effect of the excessive rain. The top of the HLP has been covered with a HDPE
lining to divert excess rain from the pad.
Gold production from the rock dumps and other sources increased by 276 oz
(8.6kg) from 932 oz (29kg) to 1,208 oz (37.6 kg) but was 643 oz (20kg) below
guidance. This was due to the excessive rain which resulted in 14 days lost
where no screening could be done at the sites, five days where no tramming of
the screened material could be done and numerous plant stoppages.
The valuation of numerous rock dumps has been completed which resulted in a
number of commercially viable resources being identified.
Table 11 - Quarterly variance analysis for TGME
Revenue variance
Period kg Price ZAR/kg Revenue ZAR`000
Q3 FY 2010 65 264,861 17,245
Q2 FY 2010 73 238,151 17,340
Total 8 (26,710) 95
Period Volume variance Price variance Revenue variance
ZAR`000 ZAR`000 ZAR`000
Q3 v Q2 2,039 (1,945) 95
(Continued)
Period kg Cost ZAR/kg Cash cost Total variance
ZAR`000 ZAR`000
Q3 FY 2010 65 335,529 21,846 (4,601)
Q2 FY 2010 73 381,035 27,743 (10,403)
Total 8 45,506 5,897 (5,802)
Period Volume Unit cost Cost variance Total variance
variance variance ZAR`000
ZAR`000 ZAR`000 ZAR`000
Q3 v Q2 2,584 3,313 5,897 (5,802)
Financials
Q3 FY2010 v Q2 FY2010
Gold revenue for TGME decreased quarter-on-quarter by 1% from ZAR17.3 million to
ZAR17.2 million due to a volume decrease of 8 kg as a result of the suspension
of underground operations during July 2009, mitigated by an 11% increase in the
ZAR/kg gold price.
The reduced volumes created a revenue variance of ZAR2 million, quarter-on-
quarter and the increased gold price had a positive effect of ZAR1.9 million on
total revenue.
Table 12 - Statement of comprehensive income for TGME
TGME Q3 FY2010 Q2 FY2010 Variance Q3
v Q2
Selected Financial information ZAR`000 ZAR`000 %
Statement of comprehensive income
Revenue 17,245 17,340 (1%)
Total cash cost (21,846) (27,743) 21%)
Production-related depreciation (5,458) (3,587) (52%)
Operating profit/(loss) from mining (10,059) (13,991) 28%
activities
Other income 591 526 12%
Restructuring costs (745) (3,032) 75%
Share option costs (357) (843) 58%
General administrative and overhead (1,573) (2,440) 36%
expenditure
(Loss) from operations before interest (12,144) (19,780) 39%
and taxation
Fair value adjustments & impairments - - 0%
Finance income & dividends 8 11 (28%)
Finance charges (235) (121) (94%)
Profit/(loss) before taxation (12,371) (19,890) (38%)
(Continued)
TGME YTD FY2010 YTD FY2009
Selected Financial information ZAR`000 ZAR`000
Statement of comprehensive income
Revenue 60,733 51,914
Total cash cost (87,830) (87,236)
Production-related depreciation (12,637) (7,297)
Operating profit/(loss) from mining activities (39,735) (42,619)
Other income 2,495 1,115
Restructuring costs (3,777) -
Share option costs (2,146) (4,657)
General administrative and overhead expenditure (7,136) (11,113)
(Loss) from operations before interest and (50,299) (57,274)
taxation
Fair value adjustments & impairments - (17)
Finance income & dividends 38 129
Finance charges (564) -
Profit/(loss) before taxation (50,825) (57,162)
Quarter-on-quarter, total cash costs reduced 21% from ZAR27.7 million in Q2
FY2010, to ZAR21.8 million in Q3 FY2010. Labour costs reduced by 39% due to the
rationalisation of TGME , stores and major items reduced by 12%, oxygen reduced
by 16%, cyanide reduced by 37% and steel balls reduced by 67% due to procurement
of cheaper material. Electricity decreased by 36%. Cash cost/kg reduced quarter-
on-quarter by 12% from ZAR381,103/kg in Q2 FY2010 to ZAR335,529/kg in Q3 FY2010.
TGME`s loss before taxation narrowed from ZAR20 million in Q2 FY2010 to
ZAR12.4 million in Q3 FY2010.
Capital expenditure decreased from ZAR22.7 million in Q2 FY2010 to ZAR16 million
in Q3 FY2010 due to the closure of the underground development.
Year-to-date FY2010 v year-to-date FY2009
Revenue increased 17% for the first nine months of FY2010 compared to the first
nine months FY2009 due to an increase of 759 oz (23.6 kg) in gold produced. The
volume variance resulted in an increase of ZAR8 million in revenue and the
increase in the price of gold on average from ZAR235,161/kg to ZAR248,518/kg
resulted in an increase of ZAR3 million in revenue.
Total cash costs increased by 1% (ZAR1 million) as a result of an increase in
volume (ZAR8.4 million) and a decrease in costs of ZAR7.8 million which was
driven by cheaper production costs relating to surface operations.
Capital expenditure for the first nine months of FY2010 amounted to
ZAR51 million (FY2009: ZAR33 million), of which approximately a third relates to
the development of the Frankfort B block.
Outlook Q4 FY2010
Heavy rainfall continues to impede surface operations and will thus result in a
much lower than anticipated gold output for the fourth quarter with
correspondingly higher unit costs. Additionally, TGME has temporarily stopped
irrigating the Elandsdrift HLP in order to allow the pad to drain the excess
rain water.
While TGME represents significant option value in the form of extensive
prospecting rights, the continued drain on the company`s cash flow, combined
with the capital required to realise the prospective potential of this asset,
has put the future of this asset under review. Accordingly, Simmers is intending
to embark on a consultative process in terms of section 189a of the Labour
Relations Act, 66 of 1995 to further restructure and down-size this operation.
Operational summary
Period Parameter US$/oz ZAR/kg Parameter ZAR/US$
FY2010 Q3 Gold price 1,101 266,149 Exchange 7.52
(LBMA) rate
Q2 960 241,594 7.83
YTD 994 254,124 7.95
FY2009 YTD 857 234,530 8.51
Operating results Simmers total
Ore milled/treated (`000 tonnes) FY2010 Q3 694,161
Q2 583,212
YTD 1,825,628
FY2009 YTD 1,624,941
Yield (g/t) FY2010 Q3 1.30
Q2 1.78
YTD 1.62
FY2009 YTD 1.83
Gold sold (kg) FY2010 Q3 903
Q2 1,036
YTD 2,965
FY2009 YTD 2,978
Gold sold (oz) FY2010 Q3 29,040
Q2 33,301
YTD 95,335
FY2009 YTD 95,761
Revenue (ZAR/kg declared) FY2010 Q3 263,761
Q2 238,248
YTD 248,466
FY2009 YTD 230,210
Revenue (U$/oz declared) FY2010 Q3 1,091
Q2 947
YTD 972
FY2009 YTD 841
Total cash costs(ZAR/kg declared) FY2010 Q3 254,972
Q2 266,345
YTD 260,648
FY2009 YTD 232,102
Total cash costs(US$/oz declared) FY2010 Q3 1,054
Q2 1,058
YTD 1,020
FY2009 YTD 848
Total cash costs(ZAR/t ore) FY2010 Q3 332
Q2 473
YTD 423
FY2009 YTD 425
Capital expenditure(ZAR/kg declared) FY2010 Q3 66,965
Q2 57,432
YTD 51,138
FY2009 YTD 33,096
Notional cash cost(ZAR/kg declared) FY2010 Q3 321,937
Q2 323,777
YTD 311,785
FY2009 YTD 265,198
(Continued)
Operating results BGM
Total Surface U/G
total total
Ore milled/treated (`000
tonnes) FY2010 Q3 677,991 499,503 178,488
Q2 579,171 335,775 243,396
YTD 1,791,824 1,153,725 638,099
FY2009 YTD 1,584,588 927,235 657,353
Yield (g/t) FY2010 Q3 1.24 0.34 3.74
Q2 1.66 0.37 3.44
YTD 1.52 0.36 3.61
FY2009 YTD 1.74 0.42 3.61
Gold sold (kg) FY2010 Q3 838 170 668
Q2 963 124 839
YTD 2,721 416 2,305
FY2009 YTD 2,758 387 2,371
Gold sold (oz) FY2010 Q3 26,947 5,463 21,483
Q2 30,961 3,994 26,966
YTD 87,478 13,370 74,108
FY2009 YTD 88,663 12,450 76,214
Revenue (ZAR/kg declared)
FY2010 Q3 263,676 264,064 263,577
Q2 238,252 238,441 230,988
YTD 248,462 251,080 169,087
FY2009 YTD 229,813 230,994 229,888
Revenue (U$/oz declared) FY2010 Q3 1,090 1,092 1,090
Q2 947 948 918
YTD 972 982 661
FY2009 YTD 840 844 840
Total cash costs(ZAR/kg
declared) FY2010 Q3 248,714 139,646 276,451
Q2 257,670 167,490 264,539
YTD 251,778 156,764 186,418
FY2009 YTD 219,230 140,074 232,160
Total cash costs(US$/oz
declared) FY2010 Q3 1,029 577 1,143
Q2 1,024 666 1,051
YTD 985 613 729
FY2009 YTD 801 512 848
Total cash costs(ZAR/t
ore) FY2010 Q3 307 48 1,035
Q2 428 62 912
YTD 382 57 673
FY2009 YTD 382 58 837
Capital expenditure
(ZAR/kg declared) FY2010 Q3 52,989 22,714 12,072
Q2 38,105 23,023 23,140
YTD 36,941 24,195 17,515
FY2009 YTD 23,594 17,835 21,992
Notional cash cost(ZAR/kg
declared) FY2010 Q3 301,703 162,361 288,523
Q2 295,775 190,513 287,679
YTD 288,719 180,960 203,933
FY2009 YTD 242,823 157,909 254,152
(Continued)
Operating results TGME total
Ore milled/treated (`000 tonnes) FY2010 Q3 16,170
Q2 4,041
YTD 33,804
FY2009 YTD 40,353
Yield (g/t) FY2010 Q3 4.03
Q2 18.01
YTD 7.23
FY2009 YTD 5.47
Gold sold (kg) FY2010 Q3 65
Q2 73
YTD 244
FY2009 YTD 221
Gold sold (oz) FY2010 Q3 2,093
Q2 2,340
YTD 7,857
FY2009 YTD 7,098
Revenue (ZAR/kg declared) FY2010 Q3 264,861
Q2 238,194
YTD 248,518
FY2009 YTD 235,161
Revenue (U$/oz declared) FY2010 Q3 1,095
Q2 947
YTD 972
FY2009 YTD 859
Total cash costs(ZAR/kg declared) FY2010 Q3 335,529
Q2 381,103
YTD 359,402
FY2009 YTD 392,904
Total cash costs(US$/oz declared) FY2010 Q3 1,388
Q2 1,514
YTD 1,406
FY2009 YTD 1,435
Total cash costs(ZAR/t ore) FY2010 Q3 1,351
Q2 6,865
YTD 2,598
FY2009 YTD 2,149
Capital expenditure(ZAR/kg declared) FY2010 Q3 246,875
Q2 313,094
YTD 209,202
FY2009 YTD 151,800
Notional cash cost(ZAR/kg declared) FY2010 Q3 582,403
Q2 694,197
YTD 568,604
FY2009 YTD 544,704
Financial results Simmers total
Revenue FY2010 Q3 238,240
Q2 246,774
YTD 736,768
FY2009 YTD 685,677
Total cash costs FY2010 Q3 230,301
Q2 275,877
YTD 772,887
FY2009 YTD 691,313
Operating profit/(loss) before non-cash
production related expenses FY2010 Q3 7,939
Q2 (29,103)
YTD (36,120)
FY2009 YTD (5,636)
Capital expenditure (ZAR `000) FY2010 Q3 60,486
Q2 59,487
YTD 151,636
FY2009 YTD 98,576
Cash flow (after capital expenditure) FY2010 Q3 (52,547)
Q2 (88,590)
YTD (187,756)
FY2009 YTD (104,211)
Continued
Financial results BGM
Total Surface U/G total
total
Revenue FY2010 Q3 220,994 44,872 176,122
Q2 229,434 29,624 193,741
YTD 676,035 104,415 389,749
FY2009 YTD 633,764 89,447 544,950
Total cash costs FY2010 Q3 208,455 23,730 184,725
Q2 248,134 20,809 221,882
YTD 685,057 65,193 429,697
FY2009 YTD 604,576 54,240 550,336
Operating profit/(loss)
before non-cash production
related expenses
FY2010 Q3 12,540 21,142 (8,603)
Q2 (18,700) 8,815 (28,141)
YTD (9,022) 39,222 (39,948)
FY2009 YTD 29,187 35,206 (5,386)
Capital expenditure (ZAR
`000) FY2010 Q3 44,412 3,860 8,066
Q2 36,695 2,860 19,409
YTD 100,512 10,062 40,373
FY2009 YTD 65,065 6,906 52,133
Cash flow (after capital
expenditure) FY2010 Q3 (31,872) 17,282 (16,669)
Q2 (55,395) 5,955 (47,550)
YTD (109,543) 29,160 (80,321)
FY2009 YTD (35,877) 28,300 (57,518)
(Continued)
Financial results TGME total
Revenue FY2010 Q3 17,245
Q2 17,340
YTD 60,733
FY2009 YTD 51,914
Total cash costs FY2010 Q3 21,846
Q2 27,743
YTD 87,830
FY2009 YTD 86,737
Operating profit/(loss) before non-cash
production related expenses FY2010 Q3 (4,601)
Q2 (10,403)
YTD (27,098)
FY2009 YTD (34,823)
Capital expenditure (ZAR `000) FY2010 Q3 16,074
Q2 22,792
YTD 51,125
FY2009 YTD 33,511
Cash flow (after capital expenditure) FY2010 Q3 (20,675)
Q2 (33,196)
YTD (78,222)
FY2009 YTD (68,334)
Transvaal Gold Mining Estates: An underground and heap leach gold operation in
Mpumalanga. Buffelsfontein Gold Mine: An underground and surface gold operation
at Stilfontein.
* Note: BGM total figure includes on-mine services costs, which are excluded
from the surface and underground cost.
CONFERENCE CALL:
A conference call with executive management to discuss the third quarter results
will commence at 3pm Central African time (CAT) and 8 am Eastern Standard time
(EST) today, Friday, 19 February 2010. This will be followed by a question and
answer (Q&A) session.
The dial in for call participants are as follows:
Johannesburg (Telkom): 011 535 3600
South Africa Toll-free: 0 800 200 648
UK Toll-free: 0 800 917 7042
Australia Toll-free: 1 800 350 100
Canada Toll-free: 1 866 605 3852
USA Toll-free: 1 800 860 2442
Other: +27 11 535 3600
Playback numbers: playback code 2544#
Johannesburg: 011 305 2030
UK Toll-free: 0 808 234 6771
AU Toll-free: 1 800 091 250
USA: 1 412 317 0088
Other: +27 11 305 2030
Forward-looking Information
This shareholders report and financial statements for the quarter ended
31 December 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
15 February 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.
For further information please contact:
Nick Goodwin Simmers investor relations executive
Mobile +27 83 629 8605
Email nick@simmers.co.za
Gail Strauss Simmers Group communications
Mobile +27 82 936 8481
Email gail@simmers.co.za
Byron Kennedy/ Marina Bidoli Brunswick
+27 11 502 7400
Melanie de Nysschen/ Thembeka Macquarie First South Advisers
Mgoduso +27 11 583 2000
Johannesburg
19 February 2010
MACQUARIE FIRST SOUTH ADVISERS (PTY) LIMITED
Sponsor and Corporate adviser
Date: 19/02/2010 07:29:01 Produced by the JSE SENS Department.
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