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Simmers expects slower growth

The headgear
at Simmers’
Johannesburg, South Africa — MININGREVIEW.COM — 28 October 2008 – Emerging South African gold and uranium producer Simmer & Jack Mines Limited (Simmers) expects slower expansion of its growth projects, but adds that if certain external funding alternatives are successful, the current capital programme and production profiles could be accelerated.

Revised technical reports on the build-up of the company’s Buffelsfontein gold mine in the North West Province (BGM) and its Mpumalanga-based subsidiary, Transvaal Gold Mining Estates (TGME), reflected a slower and more selective build-up of these projects to be largely funded from cash flow from operations. The reports also outlined a capital requirement of US$99.8 million (just over R1 billion) to bring them online over the next five years.

Simmers is pursuing a number of external funding alternatives which, if successful, will result in the current capital programme and production growth profiles contained in the updated technical reports being accelerated.

“In April we announced an aggressive development plan aimed at substantially growing our production base through the implementation of low-cost, low-risk, surface and near-surface development projects,” said Simmers CEO Gordon Miller.

“Despite inflationary pressures on mining consumables and an increase in the cost of Eskom power, the rationale for implementing our Mega Float, BIOX, and Heap Leach projects at current gold prices and currency levels, remains compelling,” he observed. ‘The reality, however, is that capital market conditions to fund new growth projects have deteriorated significantly since April, and the revised reports have been tailored to reduce external funding requirements, and to allow for a more gradual build up of production from our new growth projects,” Miller added.

The updated technical reports reflect the company`s response to current challenges being faced by the mining industry, and take into account the unprecedented increase in the costs of reagents, fuel, steel and other mining consumables, as well as the impact of safety-related issues on current production levels.

“While the company intends to continue monitoring capital markets for alternative financing arrangements, management remains focused on profitably operating its existing projects, which are expected to generate positive free cash flow in the fourth quarter at prevailing Rand- denominated gold prices in excess of R255 000/kg,” Simmers concluded.