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Modder East strike costs Gold One

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Johannesburg, South Africa — MININGREVIEW.COM — 05 May 2010 – GOLD One “’ an amalgamation of Australia’s BMA Gold and South Africa’s Aflease “’ says it has lost up to 6 000 oz of gold production in a month-long strike at its Modder East mine in South Africa.

Revealing this in a statement here, the company said that it expected June production to be between 10 000 and 14 000 oz. It reported gold production of 13 208 oz in the March quarter, of which 12 443 came from Modder. Total group production for the December quarter was 10 323 ounces.

The full-year guidance for 2010 has been lowered by 15 000 ounces to between 85 000 and 100 000 oz, with the cost predicted to remain below US$400/oz. The 15 000 oz that were to have been produced in December have been pushed back into January after the strike delayed the build- up to full production by a month.

Revenue lost due to the 5 000 to 6 000 oz reduction in output is between R40 and R50 million, but spokesman Ilja Graulich said: “Our ramp-up to full production has been moved back by a month. This is not ideal, but it’s not affected the value of the mine or anything like that.”

Gold One reported on 23 March that 800 of its 1 000 workers had downed tools in a dispute over wage hike and benefits. The ASX- and JSE-listed company told the market on 22 April that the strike was over and that workers would be back at their posts on 28 April.

The guidance for 2011 remains unchanged at between 150 000 and 180 000 oz at a cost below US$300/oz. The mine is scheduled to reach steady state production from mid-2011.

Gold One kept production ticking over during the strike, with the 200 non-striking workers continuing development work that fed the mills with ore. It told the market that gold output levels were half what they would normally be.

Production levels will return to normal from 10 May.