| Thu 11 Nov 2004, 17:53 | | NEW MAIN SHAFT FOR WES-AREAS SIGNALS IMPROVEMENT |
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WESTERN AREAS LIMITED - NEW MAIN SHAFT FOR WESTERN AREAS SIGNALS IMPROVEMENT
WESTERN AREAS LIMITED
INVESTING PROPERTY
REGISTRATION NUMBER 1959/003209/06
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
ISIN: ZAE000016549
SHARE CODE: WAR
NEW MAIN SHAFT FOR WESTERN AREAS SIGNALS IMPROVEMENT
Western Areas is `set fair` to deliver significantly improved financial results
now that the new main shaft at South Deep mine is to go operational within a few
weeks, says CEO Brett Kebble.
South Deep is a 50/50 joint venture between Western Areas and Placer
Dome.
`The corrective action taken earlier this year when management was
restructured, including a 50% reduction is senior management numbers, has
paid off handsomely`, he said
Kebble reported that cash production costs had decreased by 8,5% to
R73,636/kg for the quarter ended September 2004, compared to R80,468/kg
for the previous quarter. Total production costs had decreased by 11.1% to
R83,330/kg.
This was accompanied by a 6.6% increase in tonnages treated and a yield
improvement from 6.00 g/t to 6,27 g/t.
`The increase in production and yield translated into higher gold revenues,
with gold sold increasing by 9,9%,` said Kebble.
Although these gains had been offset by hedging obligations and the stronger
rand, the R42.4 million operating loss from gold was a significant
improvement on the R66.5 million loss reported in the previous quarter. Due
however to notional revaluation of the liabilities associated with the
derivative structure in accordance with AC 133, the company incurred an after
tax loss of R158.4 million, compared to a loss of R31.9 million for the previous
quarter, he said.
Kebble remained upbeat, saying that the imminent commissioning of the
South Deep Twin Shaft on November 19, 2004, built at a cost of 3.5 billion
over the past decade, would herald a new era for Western Areas.
`The shaft is one of the deepest single drop hoists in the world. It gives us
direct access to one of the richest ore bodies in the world. Productivity will
improve dramatically now that miners don`t have to travel up to four kilometres
underground to reach the ore body.`
`The mine is already cash positive at an operational level. Full operational
efficiencies will materialise during the course of the next year and I am
confident that the mine will then start to cover both its operating and capital
costs, and begin to repay the capital investment. `
Kebble noted that after taking into account hedge positions that matured
during the quarter, the effective price of gold sold was R64,349/kg.
Discussions were in progress to restructure the hedge upon completion of a
new mine plan.
He also confirmed that South Deep management had started discussions with
unions to match the labour force to what is required to operate the mine with
the new main shaft in place.
`It looks like about 700 employees, or about 14% of the labour force, will be
affected. Voluntary retrenchments and early retirements will be considered
before forced retrenchment. `
Statement issued on behalf of Western Areas Limited by Brian Gibson
issue Management (Contact Brian Gibson on 011 8801510 or 083 253
5988)
11 November 2004
About Western Areas Limited
Western Areas is focused on investment in the African gold mining industry. The
Company`s principal asset is its 50% interest in the South Deep Joint Venture.
South Deep is a joint venture between Western Areas and Placer Dome SA (Pty)
Ltd, a subsidiary of Placer Dome Inc.
About the PDWA JV
The Placer Dome Western Areas Joint Venture (PDWA JV) was established on 31
March 1999. It is jointly controlled by Western Areas and Placer Dome SA. The
PDWA JV is administered and governed by a PDWA JV board in terms of a joint
venture agreement (JVA).
Western Areas and Placer Dome are each entitled to appoint three directors to
the JV board.
The Placer Dome entitlement to appoint the chairman is dependent on Placer Dome
maintaining an interest in excess of 40% in the PDWA JV. The chairman has the
casting vote, except on a wide range of defined issues where board decisions
could have a material impact on the business, in which case the decision must be
unanimous.
About South Deep
South Deep is a joint venture between Western Areas and Placer Dome SA (Pty)
Ltd, a subsidiary of Placer Dome Inc.
Situated in the magisterial districts of Westonaria and Vanderbijlpark, some 45
kilometers south west of Johannesburg, the mine encompasses one of the world`s
largest gold mineral reserves, with an estimated 56.9 million ounces of gold in
the Proved and Probable Mineral Reserve categories. At its deepest, the mine
will be more than 3 300 metres below surface.
The South Deep Main Shaft has been in planning and under construction for almost
a decade. It will be completed, at a total cost of some R3,5 billion, in
November 2004.
Media Statement
11 November 2004
Date: 11/11/2004 04:57:03 PM
Produced by the JSE SENS Department
