SMALL-scale gold company Afrikander Lease (Aflease) is in talks with empowerment company Africa Vanguard Resources (AVR) in a bid to find a funding mechanism to enable AVR to buy a 26% stake in Kalgold.
Earlier this month, Aflease doubled its gold production when it bought Kalgold from Harmony in a cash and share transaction worth R275m.
AVR is Aflease's favoured empowerment partner and the news that AVR is looking to buy a stake in Kalgold is in line with a co-operation alliance signed between the two companies two months ago.
With the addition of Kalgold, Aflease's annual production will rise to about 154000oz of gold a year. The company produces about 74000oz of gold a year from its Klerksdorp operations.
Aflease, which reported its results for the three months to the end of September on Friday, said revenue in the quarter jumped to R40m, compared to R11,2m in the June quarter. In the three months, gold production increased 314% to 17 168 ounces (534kg). Of this 91kg were from the retreatment of the heap leach pads from the company's new carbon in leach plant.
The annualised production for the quarter was 68636oz.
Aflease's net loss in the three months dropped from R32,4m in the June quarter to R30m.
Aflease is under pressure because of the strong rand. In the September quarter the rand gold price received was down 1% on the June quarter. Aflease said that in light of the strong rand it might have to restructure its Klerksdorp operations.
The company said the low level of gold found in the ore mined was a concern. Grades from the open pit were 0,68g of gold a ton of ore mined. Underground recovered grades were 1,37g a ton.
"In the context of a strong rand environment and our sub-optimal grade, the board is planning to restructure both the surface and underground operations.
"The acquisition of Kalgold and the focused development of the high quality, high margin assets at Bonanza South and Modder East, will diversify our risk profile and enhance our earnings prospects," said Aflease.
A drop in mining costs made up, to a degree, for the effect of the strong rand on costs and the low grades.
Aflease said open pit mining costs fell 32% in the quarter to R49,52 a ton mined.
Cash operating cost had dropped 61% to R94779/kg, mainly as a result of the 314% increase in gold production, said the company.
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