Johannesburg, South Africa — MININGREVIEW.COM — 19 August 2009 – Emerging South African resources company Simmer and Jack Mines (Simmers) took a beating from the stronger rand and the regulatory authorities during the June quarter to post an overall loss from mining activities of R22.3 million, compared to a profit of R43.8 million in the previous quarter, reports Fin24.com.
It quoted Miningmx as saying that as a result the group’s flagship Buffelsfontein mine (Buffels) is making losses once more, and has been forced to close down its Number12 Shaft. Simmers has also temporarily shut its underground operations in Mpumalanga and retrenched 270 workers.
According to Simmers CEO Gordon Miller the overall June and March quarter numbers cannot be meaningfully compared because of the change in accounting treatment of the Simmers stake in First Uranium.
The Simmers stake was sold down to below 50% in March, with the effect being that First Uranium was accounted for as an associate from March onwards, compared to being treated as a subsidiary prior to that date.
But taking the numbers for Simmers’ gold operations on their own shows a 2% drop in gold production to 1,026kg and a 13% jump in cash operating costs to R259 892/kg.
With gold revenue dropping to R245 319/kg, the overall result was that Simmers gold operations made an operating loss of R14.9 million, compared to a R63 million profit the previous quarter.
Miller said the Buffels mine would continue to rationalise unprofitable shafts and sections until such time as the mine returned to profitability at the current rand gold price. The current rand gold price is about R242 000/kg, which is about 7% below the average gold revenue figure received by Simmers in the June quarter.
Miller added: “It should be noted that Buffels risk profile is about to improve substantially due to three new sources of production which are expected to come on line before the end of the current financial year.
“These are the introduction of the mini-float project which was commissioned in July 2009 to treat low-cost surface waste rock; the completion of the rehabilitation programme of the high grade Five Shaft which is on track for September 2009, and the addition of the higher grade tonnage from Tau Lekoa from January 2010 onwards.”