| Thu 5 Aug 2004, 18:09 | | Press Release: Results for the Quarter Ended 30 Ju |
|
Western Areas- Press Release: Results for the Quarter Ended 30 June 2004
WESTERN AREAS LIMITED
Registration Number 1959/003209/06
Incorporated in the Republic of South Africa
Share code: WAR
ISIN ZAE000016549
Results for Western Areas Limited for the Quarter Ended 30 June 2004
Western Areas is starting to show significant signs of improvement in production
efficiencies following the appointment of a new management team in May and June
2004.
In April the mine was struggling with cash costs of R92,000 per kilogram and
gold production of 946 kilograms. By June cash costs had been reduced to just
under R75,000 per kilogram and gold production increased to 1224 kilograms.
`We are confident that the new management, under the leadership of John
Bredenhann will maintain production at about 425,000 ounces a year, for the next
two years and will achieve the targeted production cost of R60,000/kilogram in
2005, `says Western Areas CEO, Brett Kebble.
It is clear that Bredenhann has cracked down with more senior managers walking
the plank since his arrival, contributing to retrenchment costs of R3,3 million
in the quarter compared to R5,6 million in the previous quarter.
A strong advocate of capital/labour partnerships, Kebble says the management
rout was informed both by extreme unhappiness at performance levels and a
realisation that major cost savings could be achieved without a significant
impact on labour stability and well-being. He says, however, that the worst is
over and management can now concentrate on optimizing performance.
`The South Deep Main Shaft will be commissioned in November and we expect
further operational efficiencies to materialise during the next year.`
According to the Western Areas quarterly report, an operating loss
from gold of R66.5 million, compared to R71.1 million in the previous quarter,
reflects the ongoing impact of the strong rand.
`Despite the adverse impact of the Easter and election breaks in April, gold
sales increased by 9.7%. This translated into marginally higher gold revenues of
R130 million, which were one again impacted by hedge commitments of about R46
million,` said Kebble.
The CEO was pleased that the 7,89g/t yield underground for the quarter was up
from the 6.87g/t in the previous period.
Total production costs decreased slightly to R152.7 million from R 155.5 million
for the March quarter.
Cash production costs decreased from R88,550 per kilogram last quarter to
R80,468 per kilogram this quarter, and total production costs decreased by 12.5%
to R93,738 per kilogram, inclusive of the retrenchment costs.
Kebble says the insurance claim relating to the rock fall at the South Shaft SV-
1 sub vertical shaft in January 2004, will take some time to finalise because of
its size and complexity.
Western Areas reports that its 50% partner in South Deep, Placer Dome, has
recently released a new estimated proven and probable mineral reserve for the
mine that accords with what was reported in the Western Areas 2003 annual
report. However, the consultants highlighted the need to achieve targeted cost
reductions for the realization of these mineral reserves to be achievable.
Kebble confirmed that the Western Areas rights issue was successfully concluded
on 27 July 2004, with the issue of some 13.2 million new ordinary shares against
receipt of R401.7 million. The R294 million bridging loan from JCI had been
repaid and the company had sufficient cash reserves and facilities to meet its
commitments for the completion of the South Deep capital project this year.
Media statement issued on behalf of Western Areas Limited by Brian Gibson (083
253 5988)
5 August 2004
Date: 05/08/2004 05:31:02 PM Produced by the JSE SENS Department
