HomeGoldSimmers profit leaps 358%

Simmers profit leaps 358%

The upgraded plant at
Simmers’ Bufflesfontein
gold mine was
commissioned in
October 2007
Johannesburg, South Africa — MININGREVIEW.COM — 19 February, 2008 – Simmer & Jack Mines, Limited (Simmers) today reported profit from mining activities of R10.8 million for the three months ended 31 December 2007, compared to a loss of R4 million for the previous quarter. The 368% quarter on quarter improvement is mainly as a result of an 81% jump in production at the group’s Mpumalanga subsidiary, TGME, as well as higher metal prices.
A results report released here today states that revenues increased 5% from R207 million in the second quarter of the 2008 financial year to R218 million for the third quarter, despite operations being negatively affected by safety stoppages, and a previously reported Eskom power outage.

Overall production costs for the group decreased by 1.9% from R211 million in Q2 to R207 million in Q3. The higher turnover and lower production costs contributed to a narrowing of the loss per share by 14% from 5.06c per share in Q2 to 4.36c per share in Q3.

Attributable gold production increased 16%, compared to the equivalent period in F2007, but showed a 1.9% decline against the previous quarter, owing to the lock-up of 151kg as a result of the commissioning of the new CIP plant at Buffelsfontein. The lock-up and the consequent reduction in production also affected group unit cash costs, which increased marginally by 1.2% per kg from R156 396/kg in Q2 to R158 190 /kg in Q3.

The group reported cash on hand of R1.7 billion at the end of the quarter.

Progress on the ramping up and development of the Group’s development projects continued apace, with 1 090 new employees and contractors coming on board in Q3, bringing the total to 8 565 new jobs created by the group since the beginning of 2005.

The group also ended the quarter recording a 38 % increase in attributable gold reserves and a 519% increase in attributable uranium reserves, as a result of an updated reserve declaration on First Uranium’s MWS.

“The boards of both Simmers and First Uranium have been working with the executive teams of both companies to establish a way forward in terms of minimising the impact of South Africa’s energy crisis on the future growth and development of the group,” said Simmers CEO Gordon Miller.

He said that the company was encouraged by statements from the Ministry of Trade and Industry that the Eskom power crisis would not impact on growth and development projects, and is working closely with Eskom to secure the power it needs to complete its projects. “These discussions are ongoing and the company will review current production and expansion plans as soon as assurances are forthcoming from Eskom,” he added.

In the interim, management has conducted a desk-top analysis on the possibility of the group generating its own power should Eskom be unable to accommodate its growth targets.