[miningmx.com] — Simmer & Jack Mines (Simmers) on Tuesday reported a 34% rise in gold production from its Tau Lekoa and Buffelsfontein gold mine to 49,170 ounces for the quarter to end-December 2010, from 36,608 oz in the September quarter.
This performance was largely due to Simmers materially increasing production at sustainable grades, and accounting recently acquired Tau Lekoa’s contribution for the full period.
Gold revenue went up from R327m for the previous quarter to R463m, with nearly half of the rise due to increased volumes, while R17.9m was due to a 5% increase in the gold price.
Average underground grade increased from 3.21g per tonne last quarter to 3.54g/t.
Chief financial officer and interim CEO Marius Saaiman described the performance as “solid”. He said higher output was largely as a result of accounting for Tau Lekoa for the full quarter, but was also due to the group’s focus on operating efficiencies, sharing operational benefits between its two operations and good cost control.
However, Tau Lekoa also contributed to an increase in cost, with cash costs rising by 18% to R376m.
Operating profit from mining activities increased to R69m from a loss of R12.7m in the previous quarter, and a profit before taxation of R204.6m.
“We have successfully implemented the first phase of our turnaround plan, which was aimed at integrating the newly-acquired Tau Lekoa operations into BGM and restoring production levels at BGM.
“The second phase of our turnaround, which involves maximising operational cost savings between our two operations, increasing production to achieve the 150,000 oz gold production target for FY2011, and further reducing operating cash costs at both operations, is now well under way and starting to contribute positively to operational and financial performance,” Saaiman said.
Tau Lekoa’s gold production for the full three months was 61.4% higher at 29,471 oz, while BGM’s total production rose by 7% to 19,699 oz.
The company said a circular would shortly be posted to Simmers’ shareholders, with information on the proposed merger between Simmers and Village Main Reef.
Shareholders would be expected to vote on the transaction during the latter part of March 2011.
“Our focus for the next quarter is to address the group’s cash flow situation and optimise our operational performance through increased production, cost control and continuing to maximise synergistic benefits between our operations,” Saaiman said.
