Simmers needs more funds

[] — DESPITE positive cash contributions from the newly-acquired Tau Lekoa operation, Simmer and Jack Mines (Simmers) remains under financial pressure and will have to raise more capital.

The gold junior’s tight financial situation means that its 33% stake in associate First Uranium is going to be diluted, according to Simmers interim CEO Marius Saaiman.

First Uranium announced in January that it needed to raise more funds because of further production problems at the Ezulwini mine which negatively affected anticipated cash flows.

Simmers kicked in about $62m to First Uranium in April last year when it had to raise $150m to keep going, but Saaiman confirmed to Miningmx that the company would not be able to participate in First Uranium’s latest capital raise.

He said: “Our information is that First Uranium is looking to raise between $40m and $50m at around C$1 a share. Clearly Simmers cannot participate given its financial situation, and that is obviously to our detriment.

“When we helped bail them out in April – when they raised funds at C$1.30 a share – the story was that would be the last time that First Uranium would need to go to the market, but here they are again less than a year later.’

Saaiman said Simmers needed to find about R155m to settle the ABSA notes which fell due in July/August.

“It’s not a huge amount of money and we are in discussions with the note holders. Obviously, given the current level of the Simmers’ share price, we need to try and roll those notes over.’

Simmers’ gold production increased 34% to 1,529kg in the December quarter (September quarter – 1,139kg) with Tau Lekoa contributing a profit of R34.5m, although Buffelsfontein incurred a loss of R2.7m.

The problem is that management forecasts gold production will fall back to about 1,400kg in the current March quarter, because of the impact on mining operations of the December holiday period and a slower-than-expected production start-up in January.