| Wed 29 Jun 2011, 11:24 | | VIL - Village Main Reef Limited - Village Main Reef Provides Operational Update |
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VIL
VIL
VIL - Village Main Reef Limited - Village Main Reef Provides Operational Update,
Wednesday 29 June 2011, Johannesburg
Village Main Reef Limited
(formerly known as Village Main Reef Gold Mining Company (1934) Limited)
(Registration number 1934/0057034/06)
Share Code: VIL
ISIN: ZAE000154761
("Village" or "the company")
VILLAGE MAIN REEF PROVIDES OPERATIONAL UPDATE, WEDNESDAY 29 JUNE 2011,
JOHANNESBURG
Highlights
- Acquisition of the majority of the Simmers and Jack Mines Limited
("Simmers") assets successfully completed and Village consideration shares
were distributed to Simmers shareholders on 27 June 2011
- Consolidated Murchison ("Cons Murch") operations benefitting from strong
antimony and gold prices, showing positive indications of management
intervention and operating profitably since acquisition on 07 March 2011
- Lesego Platinum Project ("Lesego") current drill program progresses on
target with positive intersection of reef at depths of between 600m and
800m
- Restructuring program at Buffelsfontein Mines Limited ("BGM") announced
with intention to restore BGM to profitability
- First Uranium Corporation ("FIU") shares and the Mine Waste Solution Rand
Notes ("MWS Notes") classified as investments held for trade. A board
committee has been established to evaluate alternatives to realise value
from these investments or to oversee the process of distributing the FIU
equity to Village shareholders. Based on the FIU equity Toronto closing
price of 52 Canadian cents and the face value of the MWS Notes, this
investment was valued at R610 million or 67cents per Village share
Corporate Development
Shareholders are directed to the SENS announcements of 28 June 2011 dealing with
the Board restructuring as well as with the results of the special resolutions
dealing with complying with the requirements of the new Companies Act.
We continue to pursue a strategy of creating self sustaining mining companies
from the distressed mines we acquire. Our intention is to optimize these
assets, lock in the value we believe we can create and find effective ways to
return the value created to our shareholders. We do not intend building a
typical mining house and to that effect we intend to optimize the assets we
acquire, lock in the value we believe we can create and find effective ways to
return the value created to our shareholders.
The Village Board has endorsed the Buffels management team`s turnaround plan.
The board has also decided to continue to take Tau Lekoa gold mine, Cons Murch
antimony mine and the Lesego platinum project further up the value curve,
whereas the optimum way to unlock value from our exposure to FIU as well as
other non-core assets like Weltevreden, Strathmore and the old metallurgical
plant at Hartebeesfontein will be evaluated and implemented. It is the
intention to strengthen the company`s balance sheet through such disposals, and
surplus cash and or other liquid instruments would be distributed to Village
shareholders.
Bernard Swanepoel, CEO, commented, "We are excited about where we are and
confident that the assets that we have acquired and the team we have put in
place will unlock value for all stakeholders".
Tau Lekoa
We are pleased to report that production at Tau Lekoa ("Tau") has stabilised
during June 2011 at around 94,000 tonnes at a grade of 3.7 g/t, whilst
development meters were ahead of budgeted meters. This is in contrast to the
lower than anticipated production achieved during April and May as was reported
in the Simmers fourth quarter results. Notwithstanding the improved production
during June, production for the June quarter will be around 780kg to 820kg, some
10% below planned production levels. As a result of the lower production at Tau,
the overall cash flow contribution from Tau will be similar to the contribution
made during the fourth quarter, mainly due to a continued focus on reducing
costs. Tau is operating profitably.
BGM
Good progress has been made with the implementation of the restructuring plan
announced by Simmers on 20 June 2011. The restructuring requires a CCMA
facilitated process in terms of Section 189 of the Labour Relations Act. In this
regard two meetings have been held with all the recognised unions. It is
envisaged that the process will be completed in August 2011 and thereafter
affected employees will participate in an extensive skills training programme.
The cost of the restructuring is estimated at some R55 million. The
restructuring plan is intended to bring BGM to profitability, albeit at a lower
production base than previously communicated to the market. It is anticipated
that BGM will produce some 120kg of gold per month ramping up to 140kg per
month. During June 2011 the Buffels plant was reconfigured around the expected
combined tonnages from the underground operations at BGM and Tau Lekoa. Surface
waste rock is only added to the extent that it is required to achieve optimum
milling at the desired cost for the tonnages mined from underground.
It is anticipated that total production for the June quarter will be in the
order of 400kg to 430kg, inclusive of surface material. As a result of the low
level of production levels at BGM over the last three months, without the
benefit of a reduced cost base, it is anticipated that BGM will incur a cash
flow loss of some R60 million for the quarter. Village remains confident around
the potential value of BGM, and is committed to reduce the cost base in line
with the proposed restructuring plan to ensure a profitable operation.
Cons Murch
On 7 March 2011 Village took control of Cons Murch after the fulfilment and
implementation of all suspensive conditions related to the transaction.
The benefits of the restructuring and revised mining plan have started to bear
fruit with the operation generating four months of consecutive cash operating
profits. Production for the four cycle period from March to June 2011 was
approximately 89,000 tons milled, with 93 kilograms of gold produced and 1,600
tons of Antimony produced. Cash operating profit before depreciation and tax is
expected to be R9 million for the period.
The focus remains on improving ore body flexibility and to ramp up underground
development as more production areas become available over the next 18 months.
This will facilitate a buildup in production levels to the planned steady-state
of about 27 000 tonnes per month milled. Most of the production currently comes
from the conventional Sub-Level Open Stopes employed on the three shafts. With
time, the mine will be transformed and use more mechanised stoping methods, with
expected improvements in production and efficiencies. This process has already
started at two of the operating shafts where there is ongoing deepening of the
shafts via trackless mechanised equipment. Capital has also been approved and
allocated to upgrade the plant, which will improve recoveries and operating
efficiencies, to replace underground equipment and infrastructure and also
increase development. Exploration is being undertaken on the surrounding
properties where the mine holds a prospecting right with a key focus on
antimony. We are also pleased to report that the operation has operated injury
free since Village`s acquisition of Cons Murch.
LESEGO
At Lesego we continue to make great progress with the planned resource infill
drilling, the additional shallow drilling as well as the other technical work
associated with the pre-feasibility study ("PFS"). DRA was appointed as the main
service provider for PFS. It is worth noting that the IDC earns an effective
23% of the project for funding of the full R142 million required for a 3 phased
bankable feasibility study, which is scheduled for completion during December
2013. To date R50 million has been spent.
45 000m of additional diamond core drilling has contributed towards increasing
the size and confidence of the current 28m ounce inferred 4E PGM resource. In
addition the ore body, which includes both Merensky and UG2 reefs, has been
intersected at significantly shallower depths to what had previously been
declared (1200m) with the shallowest hole intersecting Merensky Reef at 600m
below surface. An updated resource statement will be released once it has been
signed off by Lesego`s independent competent person.
Further consolidation of mineral rights within the project area continues, with
the final piece of the puzzle (the 75% portion of the mineral right on the farm
Government Ground) awaiting final ministerial approval.
To the extent that any of the statements in this release may constitute "forward
looking statements", while Village believes that such forward looking statements
are based on reasonable assumptions, investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ from those expressed or implied in those forward looking
statements. None of the information contained in this operational update has
been reviewed or reported on by the company`s auditors.
CEO Tele-conference call
29 June 2011 16:00 GMT+2)
Live Call Access Numbers
South Africa - Johannesburg +27 11 535 3600
UK (Toll-Free) 0 800 917 7042
USA (Toll) +1 412 858 4600
South Africa - Cape Town +27 21 819 0900
South Africa - Durban +27 31 812 7600
South Africa (Toll-Free) 0 800 200 648
Australia (Toll-Free)1 800 350 100
Other Countries (Intl Toll) +27 11 535 3600
Canada (Toll-Free) 1 866 605 3852
USA (Toll-Free) 1 800 860 2442
Playback Access Numbers
South Africa +27 11 305 2030
USA and Canada (Toll) +1 412 317 0088
A link of the conference call will also be available on
www.villagemainreef.co.za after the event.
29 June 2011
Sponsor
Java Capital
Investor Relations
Vestor
louise@vestor.co.za
27 (0)11 787 3015
Date: 29/06/2011 11:24:47 Produced by the JSE SENS Department.
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