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Simmers to close Mpumalanga mines

Miners at work
at Simmers’
Frankfort mine
 
Johannesburg, South Africa — 23 July 2009 – Transvaal Gold Mining Estates Limited (TGME) “’ a wholly-owned subsidiary of Simmer & Jack (Simmers) has issued a notice to organised labour in terms of which the mine will begin a consultation process aimed at closing the underground division of TGME until such time as its low-cost, high-margin surface projects can be commissioned.

Revealing this in a statement issued here, Simmers said it was anticipated that some 271 jobs in the Pilgrim`s Rest region would be affected by the process.

“The complexity of the permitting process has led to significant delays,” said Deon van der Mescht, managing director of Simmers` gold operations, “and in the current poor market conditions we can no-longer justify running the underground operations at a loss whilst there is uncertainty as to when we can expect to get surface operations to deliver at planned volumes.”

TGME`s underground operations comprise the Frankfort and Theta mines, with two other potential targets at Rietfontein and Beta.

“As a result of these issues, TGME`s underground operations have up until now been run on a trial mining basis, and have incurred very high cash costs,” van der Mescht explained. “In the current market conditions we cannot afford for any operations not to be cash flow positive, and it is against a scenario of rising costs and a much stronger than expected rand/dollar exchange rate, that we have taken the decision to conserve cash and rationalise the operation until such time as we are able to produce the volumes to make it profitable,” he added.

Underground operations will not cease entirely as the development of the high grade B Block at Frankfort will continue. TGME currently employs some 560 people, including contractors, of which 271 are employed in the underground division.

Van der Mescht added that since the group was in an extensive build-up phase at its other operations, it was hoped that alternative employment could be found within the group for the TGME employees affected by the process.

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