Grades, tremors add to Blyvoor’s woes

[miningmx.com] — A STRIKING workforce is not the only challenge
Village Main Reef faces at its recently acquired Blyvoor mine.

According to a report the company released on Thursday, a decline in grade has
pushed gold production at the asset into negative margins – on a notional cost basis –
during the September-quarter. The period also included three days of the still-to-be
resolved labour strike at the mine.

Adding insult to injury was a 3.5 magnitude seismic event during the first week of
October that has had an impact on some 40% of the mine’s available production
areas.

Village has been operating Blyvoor for its own accounts since June 1 after it had
bought the mine from DRDGold in a R150m shares transaction. Producing 216kg of
gold during the first month of its acquisition, the mine generated a profit of R5.6m, of
which R1.6m was from mining operations and R4m from the sale of Rand Refinery
shares.

During the three-month period to end-September, however, lower grades from both
surface and underground mines slowed production to 17,393 ounces for the quarter,
pushing notional costs to R533,800 per kilogram produced – higher than the prevailing
gold price. Notional costs for June was 449,494/kg of gold produced.

There is also still no end in sight to the two-week strike at the mine. “Village has
issued a second ultimatum to Blyvoor employees to return to work,’ the company
said.

Buffels, which Village acquired from Simmer & Jack last year, also continues to
operate at negative margins – with notional costs of 616,400/kg during the quarter
under review – albeit an improvement of 3% since the June-quarter. The mine was
recently spared the axe following a review of its viability, with the group saying the
higher gold price and improved production would be offering the asset a lifeline, for
now. Production on a quarterly basis was marginally higher (2%) at 9,425 ounces.

“The focus in the next quarter (for Buffels) will be on improving mining flexibility and
ensuring optimal blending which should translate into better grades,’ the company
said.

The Tau Lekoa mine was the standout performer during the period where gold
production rose 15%, to 4,140oz, largely on the back of achieving higher grades and
consistent volumes.

Antimony and gold mine Cons Murch also put in a better performance with a 4%
improvement in gold production and 3% improvement in antimony output.

Overall, Village’s gold output was 32% higher during the September-period. On a like-
for-like basis, excluding the gold produced by Blyvoor, production grew 11%.

The group expects to release full financial results towards the end of November.