[miningmx.com] – VILLAGE Main Reef has finally pulled the plug on Buffelsfontein, the gold mine near Stilfontein in South Africa’s North West province saying the asset did not have a viable orebody.
“Four shafts have been operating for two years now at a sub-optimal level,” said Bernard Swanepoel who became sole CEO of Village Main today after previously sharing the role of CEO with Marius Saaiman. “There isn’t a viable orebody in our opinion,” said Swanepoel in an interview.
Buffelsfontein was bought by Village Main in 2011 as part of the R1bn takeover of Simmer & Jack Mines, a deal that also brought with it more lucrative assets such as First Uranium which was eventually sold to AngloGold Ashanti.
However, the gold mine has limped along even after restructuring in which Village Main took staff numbers down a third to 2,500. Swanepoel said current jobs at risk stood at about 2,000 although it was possible the asset could be sold.
“In line with Village’s previous statements in this regard, the board has mandated the executive to commence with the consultation processes required to cease production at the non-profitable operations of Buffelsfontein,” Village said in a statement.
“Consequently consultations with employee representatives and other stakeholders will commence in terms of the relevant regulatory and legislative prescriptions.”
The properties on which the present Buffelsfontein mine is based were first founded in 1954 and 1955, according to information on Village Main’s website. Even today, the life of mine at Buffelsfontein is calculated to be about 15 years, equal to some 11.8 million ounces of gold resources.
However, the mine’s financial performance has been under question for years – it was shut by DRDGold in 2005 – and eventually proved untenable. For instance, it produced a R20m operating loss in the March quarter of 2012, followed by R41m and R15m operating loss in the subsequent quarters, only to then post a remarkable profit in the final quarter of the year. It was a performance that moved Saaiman to declare that in a good quarter Buffelsfontein did ‘okay’, but in a bad quarter it was terrible.
The mine was kept open in the past owing to the health of the gold price, therefore the $200 per ounce slide in the gold price during April effectively consigned Buffelsfontein’s to its inevitable sale or closure.
Commenting on an earlier statement from Village Main today that Swanepoel would take on sole management of the company, Swanepoel said: “The CEO position did not become overly demanding”.
That was after a reorganisation of management duties in the business in which Saaiman is to head the company’s platinum asset, Lesego, while the antimony asset would be split from the company.
Meanwhile, Village Main’s remaining gold asset, Blyvoor, would see Swanepoel reunited with his long-time partner from Harmony Gold, Ferdi Dippenaar, who is to be the managing director of the gold business. “He didn’t need any encouragement to get back into the business of becoming Village Main’s MD for the gold assets,” said Swanepoel.
Chief among Swanepoel’s concerns now is addressing Village Main’s share price which has been under tremendous pressure.
The stock has lost about 70% of its value in the last three months and was last trading at 71c/share. “The company has a market capitalisation of R600m which isn’t even the value of the platinum asset alone. We will get through these bad times,” Swanepoel said.
