Johannesburg, South Africa — MININGREVIEW.COM — 16 February 2009 – Emerging South African gold and uranium group Simmer & Jack Mined Limited (Simmers) is at last generating free cash flow at its flagship Buffelsfontein gold mine, and expects the two operations at its 54%-held subsidiary First Uranium to do the same from April 2010.
According to Fin24.com, Buffelsfontein is to return to normal production levels of around 351 kg/month from the end of the March quarter, as it lifts annual gold output 340% to 730 000 ounces over the next five years. Simmers produced 168 000 ounces in its 2007 financial year.
JSE-listed Simmers produced a strong third quarter to 31December 2008, raising total gold output 15% to 51 570 oz and driving gross mining profit up 226% to R47 million. The group, however, posted a loss before interest and tax of R41million against the previous quarter’s R73 million loss.
Simmers’ shares defied the 1% downturn in the gold index to notch up a 13.5% gain to 295 cents.
Total cash costs jumped to R347 million from R283 million because of high input costs.
“Although the infrastructure is now largely in place, the volumes are not yet there, and production costs will remain high until such time as the projects reach commercial production levels,” said Simmers CE Gordon Miller.
The volumes will be restored in the next three months, according to chief operating officer Deon van der Mescht. Simmers expects to produce 8.6% more gold in the fourth quarter of its financial year ending March 2009 of 56 000 oz.
First Uranium aims to produce 1.2 million pounds of uranium in its first year of production starting next quarter at its Ezulwini mine.
First Uranium received an initial payment of $50 million from Gold Wheaton, which acquired the right to receive 25% of the estimated 2.1 million oz of life-of-mine gold production from (MWS). Both Ezulwini and Mine Waste Solutions are forecast to be cash-flow positive from April 2010, said Van der Mescht.
Trade union Solidarity reports that the retrenchment of 495 employees at Simmers has been warded off, following a consultation process at the Commission for Conciliation, Mediation and Arbitration.
Solidarity thought the retrenchments at Simmers would have been ill-timed. “Gold is currently one of the safest investments and is now trading at record levels. Furthermore, Simmer & Jack aims to increase its production… a project that will require expert labour,” said Solidarity spokesperson Jaco Kleynhans.