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Pamodzi to raise $50m by end-May
Allan Seccombe
Posted: Mon, 12 May 2008

[miningmx.com] -- PAMODZI Gold hopes to have financing of $50m or R382m in place by the end of May to recapitalise the company and refurbish its operations and reduce the impact of the hedge book as much as possible, CEO Peter Steenkamp said on Monday.

The junior gold company, with aspirations to grow annual production to a million ounces in the next two years, had a tough March quarter, in which it recorded a post-tax loss of R104m, deepening from the December quarter’s R93m loss, despite a 35% uptick in gold production.

The hedge book contributed R43m to the loss and the related foreign exchange added R55m to the loss. With the increased production, the hedge accounted for 27% of production down from 36% in the previous quarter. In March, this figure was 14%.

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The hedge book stands at a negative mark-to-market of R500m, but Steenkamp ruled out a big bang approach to eliminating the book, which brought Pamodzi’s received gold price down to $769m from an average spot price of $940 in the quarter.

“If we had R500m we would rather spend it on an acquisition,” he said.

The increased production came from the inclusion of newly acquired Orkney from Harmony Gold and President Steyn from Thistle Mining. The operations were taken over from 1 March.

Gold production in the quarter was 33,805 oz from 25,120 oz in the December period. Cash costs ballooned to nearly R181,000/kg from around R155,000.