| Tue 7 Feb 2006, 10:30 | | SIMMER AND JACK MINES |
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SIMMER AND JACK MINES, LIMITED - Mining INDABA 2006 Press Release
SIMMER AND JACK MINES, LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1924/007778/06)
Share code: SIM ISIN: ZAE000006722
("Simmers" or "the company")
Mining INDABA 2006 Press Release
(Shareholders are referred to the company"s website at www.simmers.co.za for an
electronic version of this document.)
THE LAST 12 MONTHS
At INDABA 2005 you were introduced to the new Simmer and Jack image and vision.
Simmer"s only asset at the time was the small loss-making operation at Pilgrim"s
Rest in Mpumalanga. This 100 year old mine had suffered from a chronic lack of
capital for generations, and had reached a stage where it was surviving on a
hand-to-mouth basis. The new management team had identified a number of
immediate action steps to keep the operation open, and was able to raise capital
from Top-Gold, a Swiss gold fund, to see the company through its immediate cash
requirements.
Our vision then was to turn the asset around and to convert the resource ounces
to reserves. There were plenty of the former and very little of the latter. In
addition, the mine was still employing mining methods dating back to the late
nineteenth century - narrow, restricted access, multiple handling of the ores
and little mechanisation. Hamstrung by a lack of capital, debt and a
disinterested major shareholder, the obstacles facing Simmers were formidable.
To overcome these hurdles, a dedicated, highly experienced management team was
assembled. They set about these challenges by identifying the obstacles and
constraints facing the TGME operation and appointed some highly experienced,
reputable consultants who were able to grasp the team"s vision to grow the
company into a significant, albeit small junior gold miner.
The liquidation of Buffelsfontein Gold Mine in March 2005 presented Simmers with
an opportunity to acquire a significant gold producer. The risk was obviously
high and management debated the issue long and hard. The question of how to
raise the capital to purchase the company was a major hurdle to overcome. Once
the decision was made to pursue Buffelsfontein and our bid had been accepted, a
team of experienced miners was assembled to ensure that a smooth transition
would ensue, which placed us in an excellent position to bring the mine up to
full production in the shortest possible time.
Despite protracted and frustrating delays in acquiring Buffelsfontein, during
which time Simmers took over the day-to-day management of the mine, the court
finally sanctioned the acquisition in October 2005. With the acquisition,
Simmers acquired an established mine capable of producing 230 000 ounces a year,
propelling it up the list of junior producers.
Since its acquisition the new Buffelsfontein management team has systematically
and professionally set about restoring the company"s production capacity, and
full production is anticipated during the first quarter of 2006, when the
company will also return to profitability.
In November 2004 Simmers identified the Randfontein 4 Shaft as a potential
opportunity for pillar extraction mining, which view has since been confirmed
through a pre-feasibility study. Simmers submitted an application to acquire the
mining rights for 4 Shaft in May 2005, which application has been accepted by
the Department of Minerals and Energy. The required EMPR, EIA and Social and
Labour plans have also been submitted, and Simmers anticipates that the
application will be granted in February 2006.
A number of significant successes have been achieved in the last 12 months:
* A fully underwritten rights offer was completed in July 2005 which created 516
000 000 new Simmers ordinary shares, raising cash and increasing liquidity in
the shares.
* A BEE company holding 44% of Simmers ordinary shares has been introduced.
* R59 000 000 cash raised from the rights offer.
* Comprehensive board restructuring.
* Loan of US$10 million finalised with Canadian investor Aberdeen International.
* 100 million Simmers" shares placed with new investors both local and overseas.
* $3 million received from First Uranium Corporation of Canada to finance a
bankable feasibility study on the uranium potential of Buffelsfontein.
* 4 independent non-executive directors and a new Chairman appointed as part of
the drive toward a King II compliant company.
THE COMPANY
(Shareholders are referred to the Simmers website at www.simmers.co.za for an
electronic copy of this document, which includes a graph of the company"s Net
Present Value Curve; as well as graphs summarising an independent industry
overview by Tlotlisa Securities of Measured and Indicated Resources, Proven and
Probable Reserves, Market Capitalisation per Resource Ounce, Market
Capitalisation per Reserve Ounce, and a Share Price Premium/Discount to DCF
Valuation.)
Operations
Our operations are comprised of five business units:
* Buffelsfontein Gold Mines Limited
* Transvaal Gold Mining Estates Limited (TGME)
* Ezulwini Mining Company (Pty) Limited
* First Uranium (Pty) Limited
* Exploration
(Shareholders are referred to the Simmers website at www.simmers.co.za for an
electronic copy of this document, which includes a graphical presentation of the
company"s Forecast Gold Production and of its Forecast Cash Flow by Mine.)
BUFFELSFONTEIN
Buffelsfontein Gold Mines comprises both Hartebeesfontein and Buffelsfontein
gold mines, historically multi-million ounce gold producers and each a
significant producer of uranium in the past. In March 2005 DRDGold placed the
company into provisional liquidation. Production immediately ceased and the mine
was placed in the hands of the provisional liquidators. Bids were invited to
purchase the company and Simmers was successful in its offer. Pending conclusion
of the legal formalities, Simmers commenced treatment of the surface material in
July 2005 in terms of an interim agreement with the liquidators. These
operations produced 446 kg of gold at a grade of 1.44 g/t during this interim
period. Following the acquisition of the company, the dump treatment operations
have continued and the mine is investigating further opportunities to treat
surface material, particularly with the favourable gold price.
During their lifetime both mines were significant uranium producers, and only
ceased uranium production when the price of the metal slumped to record lows.
Together with most other South African producers, the uranium processing
facilities were closed and demolished in accordance with the requirements of the
mine"s rehabilitation plan. Simmers has identified the Buffelsfontein and
Hartebeesfontein tailings dams as a major resource of uranium, capable of being
mined efficiently and cheaply. In addition, the underground uranium ores are
also a significant resource. A flotation plant will be commissioned to allow the
mine to produce concentrate, pending the finalisation of a bankable feasibility
study and the construction of a uranium plant. A by-product of the process will
be sulphuric acid, which is in demand in South Africa following the closure of
most of the acid plants on the gold mines.
(Shareholders are referred to the Simmers website at www.simmers.co.za for an
electronic copy of this document, which includes a summary of Buffelsfontein"s
resource and reserve statement as released on SENS on 24 January 2006.)
TGME
Since the discovery of gold at Pilgrim"s Rest in the 1880s, the region has
suffered from a lack of capital to develop the operations and once the
Witwatersrand mines were built, the small scale of the Pilgrim"s operations has
resulted in their dwindling into obscurity.
As the only gold mine in the Simmers portfolio a year ago, it was critical to
evaluate all of the potential of the mine, identify the problem areas and
determine how to cure the ills. For this purpose capital was required, and it
was obtained through the rights issue. The constraints which the mine has
suffered in the past have been primarily caused through a lack of capital.
Simmers has identified the constraints, planned the eliminating process and has
raised the capital to do so. Included in these restraints has been the plant
capacity, and so the idle second mill has been re-commissioned, a bigger DMS
plant acquired and further plant modifications made. Underground access has been
through narrow adits, which date back to the original development of the
workings. Their small scale and inability to be upgraded was soon identified as
a major constraint, with the result that a plan has been implemented to
introduce the tried and tested mining methods used successfully on the South
African chrome mines. This requires enlarging the adits and travelling ways, and
installing conveyers to transport the ore from underground to surface. In
addition, the mine has acquired LHDs which are far more efficient in moving ore
underground. These changes have resulted in a steady increase in production, in
line with the ultimate plan of producing 50 000 oz a year.
Although a small producer, TGME has produced the major portion of the 6 000 000
oz which have come out of the Pilgrim"s Rest - Sabie gold fields, and the
company is of the view that it has the potential to produce considerably more
ounces during its lifetime. A challenge facing TGME is the conversion of its
resources to reserves, and the finding of additional resources to bolster
production.
(Shareholders are referred to the Simmers website at www.simmers.co.za for an
electronic copy of this document, which includes a summary of TGME"s resource
and reserve statement as released on SENS on 24 January 2006.)
EZULWINI
Since November 2004 the Simmers team, together with its selected partners, the
Waterpan Mining Consortium, has been concentrating on acquiring the mine
previously known as Randfontein 4 shaft. This mine was operated by Harmony,
which had no intention of reopening the mine. On a "use it or lose it" principle
Simmers seized the opportunity and submitted an application for the mining
rights of 4 shaft to the Department of Minerals and Energy. The application was
accepted in May 2005 and since then our efforts have been concentrated on
meeting the Department"s requirements, in particular those relating to
environment, labour and social plans, and the disposal of underground water
arising in the workings. We are of the view that our application will be
successful, and anticipate being awarded the mining rights during the first
quarter of 2006.
During the initial mining years of 4 shaft by JCI in the early 1960s, a large
number of sample points were generated , which we have been able to obtain.
Check samples have proven these to be accurate, and with modern technology
Simmers has been able to generate a model of the shaft pillar, which shows a
significant resource. A bankable feasibility study is currently underway and it
is anticipated that it will be completed simultaneously with the awarding of the
mining rights. Negotiations for the acquisition of the surface infrastructure
are also close to completion and Simmers will acquire the necessary
infrastructure to operate the mine. The mine was previously a major producer of
uranium from the Middle Elsburg Reefs. It is anticipated that the accessible
resources of uranium currently available for mining will provide an ideal
platform for early production.
(Shareholders are referred to the Simmers website at www.simmers.co.za for an
electronic copy of this document, which includes a summary of Ezulwini"s
resource and reserve statement as released on SENS on 24 January 2006.)
FIRST URANIUM
Both Buffelsfontein and Hartebeesfontein were major uranium producers in their
time. However, when the uranium market later remained in the doldrums, these
mines, like most other South African producers, closed and demolished their
plants. The mining of uranium in association with the gold ore continued, but
reported to the tailings dams. Simmers has identified these tailings as a
substantial resource of uranium, and the tailings have been drilled to test the
grade. The following tables indicate the mineral resource of the tailing at
Buffelsfontein, and a bankable feasibility study is underway, due for completion
in late February 2006. Initial indications are that a viable uranium extraction
business can be established at Buffelsfontein, treating both the tailings for
uranium, but also the underground ore being mined for gold. The tailing dams
also have a contributory gold and sulphur credit, allowing the mine to develop a
profitable uranium business. With the existing plant, Buffels will be able to
produce a gold and uranium concentrate within 3 months of start-up, which will
be sold to generate revenue whilst the feasibility study is being completed and
the plant built.
(Shareholders are referred to the Simmers website at www.simmers.co.za for an
electronic copy of this document, which includes a summary of Buffelsfontein"s
uranium resource statement as released on SENS on 24 January 2006.)
The production of uranium from Ezulwini was also curtailed when the market
collapsed. Significant resources remain at Ezulwini, and the company is
conducting a feasibility study into its viability.
(Shareholders are referred to the Simmers website at www.simmers.co.za for an
electronic copy of this document, which includes a graph of the company"s
uranium resource distribution in terms of grade and tons above cut-off grade.)
EXPLORATION
The Pilgrim"s Rest /Sabie gold fields have produced over 6 million ounces of
gold in the past century. Much of the production has been the result of
primitive exploration work, which followed a basic technique of chasing the reef
outcrops on surface. Very few modern exploration techniques have been employed
historically, and none in the last 20 years.
With the advantages of the huge strides made in exploration technology in recent
years, Simmers is intent on acquiring those skills and conducting extensive
exploration work to determine whether a source for these deposits exists. A
suitable partner has been identified and a joint venture agreed on. Work will be
undertaken over selected targets in the region. To this end TGME has applied for
prospecting rights over selected farms in its portfolio of holdings, and
anticipates being granted prospecting rights during the first quarter of 2006. A
significant investment will be required to fund the exploration, and such
funding will be arranged by its joint venture partners.
In the Sabie region prospecting rights have been applied for other mines
previously in the TGME stable. Once the rights are obtained, work will commence
on opening up the abandoned workings and determining the potential of those
properties. A significant resource is still evident in the Sabie area, and
Simmers intends to convert this resource to reserve category.
MANAGEMENT TEAM
Gordon Trevlyn Miller (43)
Pr.Eng, NHDMM, PMD (UCT), SMP (Henley), MSAIMM
(Chief Executive Officer). Appointed November 2004.
Born on 12 September 1961, Gordon has had 24 years" experience in the gold
mining industry having occupied senior executive management positions both
locally and abroad. He is a registered professional mining engineer and is a
member of the South African Institute of Mining and Metallurgy. Since 1994 he
has gained valuable executive experience whilst performing operational
leadership roles in South Africa, Canada and Western Australia.
John de Villiers Berry (54)
BA. (Rhodes), LLB. (Natal), LLM (Wits), MDP. (Unisa), EDP Kellogg
(Executive Director). Appointed November 2004.
Born on 24 February 1951, John joined the mining industry 27 years ago. He is a
member of the CLASA, ELA and IBA and admitted as an attorney and notary. He was
in charge of the legal department of Rand Mines Limited and Randgold.
Graham Peter Wanblad (64)
EDP. (Manchester)
(Executive Director). Appointed November 2004.
Born on 15 June 1941, Graham started his engineering career 44 years ago with
Johannesburg Consolidated Investments. He has occupied various executive
management positions within the mining industry and is a member of the SAICE and
the SAIME professional associations.
Gerhard Jacobs (42)
Bachelor in Accounting (Potchefstroom University), MDP (Unisa), MBA
(Potchefstroom University)
(Financial Director). Appointed November 2005.
Formerly with Placer Dome Canada, Jacobs has spent most of his career in the
mining industry, specifically in the gold and chrome sector. Prior to taking up
the post of team lead: finance, for Placer Dome Canada, Jacobs spent almost two
years as financial and administration manager of the Placer Dome /Western Areas
Joint Venture. He combines a solid background in company tax with a broad
understanding of the mining industry having held positions at Anglo Platinum
Shared Services, Mozal S.A.R.L Smelter and Samancor Tubatse Ferrochrome.
James Patrick William Fisher (50)
BSc (Hons) EMBA, ARSM, FIMMM, Ceng
(Chief executive officer of First Uranium, Metallurgical Consultant Simmer and
Jack Mines)
Born on 5 October 1955, Jim has 28 years" experience in the mining industry,
including nine years on the Zambian Copper Belt and the rest in South Africa.
His experience initially in the metallurgical field broadened to include most
areas of the business. Jim is a Chartered Engineer, a fellow of the institute of
Materials, Minerals and Mining, a member of the South African Institute of
Mining and Metallurgy, a member and past president of the Mine Metallurgical
Managers Association of South Africa.
Roland Eric Freeman (46)
Pr. Cert. Eng, PMP
(Group Consulting Mechanical and Electrical Engineer)
Born on 10 January 1960, Roland has 28 years" experience in the mining industry.
He has experience on Gold, Platinum and Antimony Mines as well as experience as
a Project Manager, designing and constructing mines. Roland is a Professional
Certificated Engineer and a Project Management Professional as awarded by the
Project Management Institute of America as well as a registered member of the
Engineering Council of South Africa (ECSA) and the association of mine resident
engineers (AMRE).
Emmerentia Oosthuizen (32)
B.Com. Hons (Pretoria), CA (Unisa).
(Financial Manager)
Emmerentia was born on 15 July 1973. On completion of her B.Com. she joined the
South African Revenue Services in the auditing division. She joined Randgold &
Exploration in 2003 as the Financial Manager where her duties include performing
the group financial reporting, taxation and the 20f-filings for the New York
Stock Exchange.
Deon Thomas van der Mescht (42)
NHDMM (Wits), MMCC
(Chief operating officer Simmer & Jack Mines, Limited; General Manager - Simmer
& Jack North West Operations)
Born on 17 April 1963, Deon has worked in the mining industry for the past 21
years and has valuable experience in managing marginal and aged gold mines in
South Africa. He has extensive knowledge of all aspects of gold mining in South
Africa and has occupied various senior executive management positions. Deon is a
member of the South African Institute of Mining and Metallurgy and the South
African Association of Mine Managers.
Mark Norman Glasspool (40)
NHDMM. (Wits), BSc Eng. (Wits), MMCC
(Mining Manager)
Born on 26 March 1965, Mark has worked in the industry for 19 years and has
valuable experience of South Africa"s Free State mines. He was named best mining
engineering student and best final year student at the School of Mining and
Metallurgy, and is a member of the South African Institute of Mining and
Metallurgy, the Engineering Council of South Africa and the South African
Association of Mine Managers. Mark has been tasked with leading the turn-around
at the Mpumalanga operations.
Chopper van der Bijl (58)
BSc Min Eng, Wits, MMCC, MDP UNISA, GDE Min Eng, Wits, GDE Ind, Eng, Wits, PMD
UCT
(Chief Operating Officer Ezulwini). Appointed November 2005.
Born on 6 April 1947, Chopper has 35 years" experience in hard rock, open-cast,
shallow and deep level mining. He has led many a project team in projects, the
diversity of which covers large shaft sinking and mine establishment,
implementation of trackless mining and change management initiatives.
CORPORATE DIRECTORY
DIRECTORS
NRG Brunette (Non-executive Chairman)
GT Miller (Chief Executive Officer)
J d V Berry (Executive)
GJ Jacobs (Executive)
JP Schumacher (Swiss)(Non-executive)
GP Wanblad (Executive)
BJ Njenje (Non-executive Vice-chairperson)
VA Mkele (Non-executive)
DH Brown (Non-executive)
K Wakeford (Non-executive)
AX Sisulu (Non-executive)
VM Watson (Alternate)
E Oosthuizen (Alternate)
SECRETARY AND REGISTERED OFFICE
Andrea Townsend
5 Press Avenue
Selby, Johannesburg
Republic of South Africa
(PO Box 82291, Southdale, 2135)
Fax: +27 11 837 3840
Tel: +27 11 830 0390
UNITED KINGDOM REGISTRARS
Capita Registrars
The Registry
34 Beckenham Road
Beckenham, Kent
BR3 4TU
United Kingdom
Tel: +944 870 162 3100
Fax: +944 208 639 2342
TRANSFER SECRETARIES - SOUTH AFRICA
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg, 2001
(P O Box 61051, Marshalltown, 2107)
Republic of South Africa
Tel: +27 11 370 5000
Fax: +27 11 688 7721/2
UNITED KINGDOM OFFICE
St James"s Corporate Services Limited
6 St James"s Place
London
SWIA INP
United Kingdom
AUDITORS
Grant Thornton
Registered Accountants and Auditors
Chartered Accountants (SA)
South African member firm of Grant Thornton International
137 Daisy Street
Sandown, 2196
(Private Bag X28, Benmore, 2010)
Republic of South Africa
BANKERS
ABSA
LISTING DETAILS
Simmer and Jack Mines, Limited
Registration No: 1924/007778/06
Share Code: SIM
ISIN: ZAE 000006722
("Simmers" or "the Company" or "the Group")
DISCLAIMER
Statements made in this document with respect to Simmer and Jack"s current
plans, estimates, strategies and beliefs and other statements that are not
historical facts, are forward-looking statements about the future of Simmer and
Jack. These statements are based on management"s assumptions and beliefs in
light of the information currently available to it. Simmer and Jack cautions you
that a number of important risks and uncertainties could cause actual results to
differ materially from those discussed in the forward-looking statements, and
therefore you should not place undue reliance on them. The potential risks and
uncertainties include, among other, risks associated with fluctuations in the
market price of gold and uranium, gold and uranium production, estimates of
reserves and mine life and liabilities arising from mine closure. Simmer and
Jack assumes no obligation to update information in this document. No
information contained herein is deemed to constitute an offer of securities.
E-mail: info@simmers.co.za
Website: www.simmers.co.za
7 February 2006
Johannesburg
SPONSOR
Sasfin Capital
(A division of Sasfin Bank Limited)
Sasfin Place, North Block
13-15 Scott Street
Waverley 2090
(P O Box 95104, Grant Park 2051)
Tel: +27 11 809 7500
Fax: +27 11 809 7726
Date: 07/02/2006 10:31:08 AM Produced by the JSE SENS Department
