| Thu 20 Oct 2005, 15:11 | | Western Areas Limited Media Statement |
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Western Areas Limited Media Statement
WESTERN AREAS LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1959/003209/06)
("Western Areas" or "the Company")
Share code: WAR & ISIN No: ZAE000016549
ADR Ticker symbol: WARUY
CUSIP No: 957654304
WESTERN AREAS LIMITED MEDIA STATEMENT
20 October 2005
WESTERN AREAS CONTINUES TO DELIVER
Major production and efficiency improvements at the South Deep Mine, combined
with a stronger gold price, helped Western Areas report a profit of R32 million,
or 27,1 cents per ordinary share, for the quarter ended 30 September 2005.
"South Deep is starting to deliver on the promise that prompted a multiple
billion investment a decade ago", said acting CEO, Chris Lamprecht.
Despite the negative impact of industry wide wage strikes during the quarter,
the restructured South Deep management team had delivered an impressive mining
operating profit of R20.1 million (excluding hedging) in the third quarter.
"In the last quarter we reported a 25% increase in gold production and a 14%
decrease in cash unit costs. This time around, management pushed gold
production by a further 16% to 2 082/kg and reduced cash costs by 9,5% to R67
981/kg."
The average gold price realised improved by 17% to R74 352/kg. Without the
hedge obligations, the average price of gold achieved would have been R92
229/kg.
"This emphasises the urgent need to restructure the derivative structure and
thus improve the company"s cash flow. The directors are paying particular
attention to this and we hope to have resolved matter within the next few
months. "
Gold revenue for the quarter was boosted to R130,7 million compared to R96,4
million the previous quarter. A 2,7% increase in total production costs to
R161,7 million contributed to a significant reduction in the operating loss from
gold (including hedging) from R61 million in the previous period to R31 million
for the September quarter.
Fair value adjustments relating to the revaluation of the derivative structure
contributed R70.1 million to income. Exchange gains relating to the option
premium payable added a further R46,5 million. The deferred taxation adjustment
arising from the fair value revaluations was R37,8 million.
The R640 million rights issue would proceed shortly. Supported by a R460
million facility from Investec Bank, major shareholder JCI remained committed to
the rights offer and would underwrite up to R250 million. The JCI loan of R369
million (including the recent settlement of approximately $13 million
contribution to operating costs at South Deep) would be repaid using right offer
proceeds. A rights offer circular would be sent to shareholders shortly.
An independent international review panel was finalising the South Deep year-end
mineral reserve declaration. Details of the possible reduction in mineral
reserves anticipated in the previous quarterly report would be reported to
shareholders in the 2005 annual financial statements.
John Bredenhann CEO of the South Deep JV said he would withdraw his pumping
staff from the neighbouring Randfontein Estates Limited No. 4 Shaft on 21
October 2005.
"Responsibility for pumping will revert to the owner of the mine. The JV has
satisfied the Department of Minerals and Energy that its people and assets are
safe regardless of what the owners do with the shaft. The saving to South Deep
should be in the order of R5 million a month", said Bredenhann
Statement issued on behalf of Western Areas Limited by Brian Gibson Issue
Management (Contact Brian Gibson on 011 880 1510 or 083 253 5988)
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 55,6 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.
Date: 20/10/2005 03:11:05 PM Produced by the JSE SENS Department
